Holding

Compensation for the acquired tea‑class land is Rs.35,000 per bigha and for each tea bush is Rs.37.50.

Summary

The Supreme Court examined the compensation awarded for 681 bighas of tea garden land acquired under the Land Acquisition Act, 1894. The High Court had fixed compensation at Rs.10,876 per bigha for land and Rs.75 per tea bush, which the appellants argued were inadequate and excessive respectively. The Court considered the State's earlier offer of Rs.55,000 per bigha, comparable awards in other districts, estimates prepared by the government, and sale deeds, concluding that the value of tea‑class land did not vary significantly across districts. It held that a fair and adequate compensation for the land is Rs.35,000 per bigha, taking into account statutory benefits, and that compensation for tea bushes should be Rs.37.50 each, half of the arbitrator’s award, as no land‑rehabilitation costs were involved. The appeals were therefore partly allowed, directing the Collector to recompute and pay the revised amounts.

Issues considered

The adequacy of the High Court's compensation of Rs.10,876 per bigha for tea‑class land.
The relevance of the State Government's earlier offer of Rs.55,000 per bigha in determining market value.
Whether compensation for tea bushes should be Rs.75 per bush or a lower amount.
The applicability of the Krishnamurthy formula in assessing tea‑bush compensation.
Whether the value of tea‑class land varies by district within Assam.

Legislation cited

Land Acquisition Act, 1894s. 18, s. 4, s. 6

Subjects

land acquisitioncompensationtea gardenvaluationsolatiuminterestKrishnamurthy formulatea bushesSupreme Court

Judgment

I
4 NUMALIGARH REFINERY LTD. A
v.
GREEN VIEW TEA & INDUSTRIES AND ANR.

MARCH 15, 2007

[B.P. SINGH AND TARUN CHATTERJEE, JJ.] B

Land Acquisition Act, 1894.

Sections 4, 6 and 18-Acquisition of tea gardens-Government offering
compensation @ Rs. 55,0001- per bigha-Offer of government rejected and C
government forced to initiate proceedings for acquisition under the Act-
Compensation @ Rs. 7,0001- per bigha awarded by Collector-Amout of
compensation challenged as being grossly inasequate-District Judge
enhancing compensation to Rs. 22,0001- per bigha-High Court fixing
compensation@ Rs. 10,8761- per bigha-Government offering compensation D
for similar class of lands in other districts @Rs. 60,0001- per bigha-Award
in respect of similar class of lands acquired in another district made @ Rs.
55,0001- per bigha-Highest sale deed for similar class of lands in another
district @ Rs. 50,0001- per bigha produced-Compensation claimed at Rs.
55, 0001- per bigha for land acquired-Held, value of tea class lands did not
vary much on account of their location in different districts-Jn the facts, E
compensation enhanced to Rs. 35,0001- per bigha-Compensation worked out
@ Rs. 35,0001- per bigha fair and adequate as appellant also entitled to
statutory benefits like solatium and interest thereon.

Notification under Section 4 of the Land Acquisition Act, 1894 was
issued for acquisition of 681 bighas of land with tea bushes of the appellant F
for the benefit of the respondent in the District of Golaghat. The Collector
awarded compensation for lands @ Rs. 7,000/- per bigha and for tea
bushes @ Rs. 15 per tea bush. Appellant sought referece under Section

- 18 of the Act and District Judge awarded compensation @ Rs. 22,000/-
per bigha for the lands and @ Rs. 75/- each for tea bush. Appellant,
respondent and Collector all filed appeals in the High Court against the
award of the District Judge. High Court dismissed the appeal preferred
G

by the appellant while allowing the appeals preferred by the respondent
and the Collector and restored the award of the Collector granting

1143 H
1144 SUPREME COURT REPORTS 12007) 3 S.C.R.

A compensation @ Rs. 7000/- per bigha and Rs. 15/- per tea bush. Appellant
filed review application against dismissal of its appeal. High Court partly
allowed review application and increased the compensation awarded for
the lands from Rs. 7000/- per bigha to Rs. 10,876/- per bigha and awarded
compensation of Rs. 75/- for each tea bush. Aggrieved by the order of the
B High Court in review, both the appellant and respondent have appealed
to this Court.

Appellant contended that compensation awarded by the High Court
os wholy unjustified and grossly inadequate as the State having itself
granted compensation @ Rs. 55,000/- per bigha, which was also at one
C stage offered to the appellant, and in the light of several awards made and
setimataes prepared by the Department of the State Government, there
was no justification for granting to the appellant compensation for the
lands at a rate less than Rs. 55,000/- per bigha; that High Court ought to
have relied on the approval of rates@ Rs. 60,000/- per bigha for tea lands
in the districts of Tinsukia and Dibrugarh and also on two awards made
D in respect of tes lands in the district of Sibasagar fixing rate at Rs. 55,000/
- per bigha ; that of the three sale deeds produced before the Courts the
highest rate should have been accepted which was Rs. 50,000/- per bigha;
r
and that High Court had fixed rate of Rs. 75/- per tea bush on the basis
of an award which was approved by Division Bench of the High Court.

E Respondent contended that earlier offer made by the State
Government for the. lands in question @ Rs. 55,000/- per bigha was
cancelled since the appellant did not accept the same and it became
neccessary to resort l:o the process of acquisition under the Act; that the
three sale deeds on which the appellant relied related to small plots by
F the side of the road which were not comparable with the lands subject
matter of the acquisition; that Dibrugarh and Tinsukia were more ·i
developed than the district of Golaghat; that awards relied upon by the
appellant related to the district of Sibasagar and not the district of
Golaghat; and that compensation for tea bushes @ Rs. 75/- each is
excessive and even if the formula adopted by the Arbitrator is accepted,
G the compensation will not be Rs. 75/- per tea bush but only Rs. 37.50 per
tea bush.
i-
Partly allowing the appeals, the Court

HELD: I. The compensation awarded by the High Court is
H
NUMALIC.ARH REFINERY LTD •·.GREE' VIEW TEA & INDUSTRIES 1145

inadequate and requires modification. In the first instance, the government A
j ' itself suggested that the appellant may be compensated by working out
the compensation @ Rs. 55,000/- per bigha. The proposal made by the
Deputy Commissioner in respect of the lands in question was acceptable
to the government. Unfortunately, the appellant did not agree to accept
the offer made by the State Government and, therefore, it became B
necessary to resort to acquisition proceedings under the Land Acquisition
Act. This appears to be a very important piece of evidence, and the mere
fact that the Government later cancelled its decision because the appellant
did not agree to the rates suggested, will not make much of a differnece.
The documents do establish that the government itself was willing to pay
compensation for the lands @ Rs. 55,000/- pe bigha, but the appellant C
thought that the rate offered was inadequate. !Para 28] [1157-A-C)

2. The decision of the Government to offer compensation @ Rs.
55,000/- per bigha is not an isolated instance because in other districts as
well a similar rate was offered. At least two such orders were produced
which related to the districts of Dibrugarh and Tinsukia. An all inclusive D
price of Rs. 60,000/- per bigha was offered for tea class lands. The amount
offered included the element of interest as well, and related to an earlier
period namely the period before the year 1990 since the acquisition/take
over in those cases related to the period prior ro 1990. This certainly gives
a clear picture as to the value of tea class lands in different districts of E
the State. The submission that the proximity of the lands in question was
an important consideration cannot be over-looked. It is true that if there
was evidence to prove that tea class lands were sold in the vicinity of the
lands in question at a particular rate, the Court could not have ignored
such sale transaction and the price paid. However, in the instant case, this
Court is concerned with tea garden. It was not disputed that such tea F
gardens are to be found in many districts of the State of Assam. Having
regard to the fact that in the districts of Dibrugarh and Tinsukia
compensation at the same rate was awarded, it appears that the value of
tea class lands did not vary much on account of their location in different
districts. The two instances relied upon by the appellant provides evidence G
to the effect that tea class lands in different districts, in the absence of
special features, had the same value. These rates were fixed in the year
1992, only a few months before Notification under Section 4 of the
LandAcquisition Acr was issued in respect of the lands in question.
[Para 291 [1157-D-Hl
H
1146 SUPREME COURT REPORTS (2007] 3 S.C.R.

A 3.1. There is no dispute that in the Jamabandi the lands have been
classified as tea class. The lands fall within earlier formed part of the
district of Sibasagar. [Para, 13[ [1150-C[

3.2. The two estimates prepared by the Collector of Sibasagar dated
April 23, 1992 and May 25, 1992 also give some indication as to the value
B of tea class lands and it is not a mere co-incidence that in those estimates
as well the cost of acquisition worked out was@ of Rs. 55,000/- per bigha.
Similar is the case with the two awards made in respect of tea class lands
acquired in the district of Sibasagar where also the rates worked out to
about Rs. 55,000/- per bigha. Notification in respect of both these
C acquisitions was issued in May 1994, while Notification under Section 4
of the Act was issued on November 11, 1992 in the instant case.
[Para 30] [1158-C-D]

4. The sale deeds no doubt relate to small plots but the best price
offered was one undr sale deed dated February 12, 1985 which was@Rs.
D 50,000/- per bigha. Even if the value is reduced by about 30% on account
of smallness of the plots but enhanced the price @ 10% per year since
the sale deed related to a period approximately 7 years earlier, it would
again work out to a figure not less than Rs. 55,000/- per bigha.
[Para 31[ [1158-F]

E 5. The offer made by the Government was an all inclusive offer of
Rs. 55,000/- per bigha. if the appellant had accepted the offer, it would
not have been necessary for the State to initiate a proceeding for
acquisition under the Land Acquistion Act and, thereafter, to contest the
protracted litigation. The State would not have been liable to pay solatium,
interest etc. The grant of compensation @ Rs. 55,000/- perr bigha under
F the land Acquisition Act is, therefore, not justified. It has been often said
that fixation of compensation under the Land Acquisition Act involves an
element of rational guess work. Having regard to the evidence on record
compensation worked out @ Rs. 35,000/- per bigha for the lands would
be fair and adequate because the appellant would also be entiled to
G statutory benefits such a solatium and interest thereon. It is accordingly
held that the appellant is entitled to compensation for the lands@ Rs.
35,000/- per bigha apart from all statutory benefits to which it may be
entitled by way of solatium, interest etc. [Para 33] [1159-A-D]

6. It would thus be seen that the award of the Arbitrator fixing the
H rate of Rs. 75/- per tea bush took into account the cost of re-habilitation
NUMALIGARH REFINERY LTD ,,, GREEN VIEW TEA & INDUSTRIES 1147

I
of the land which was adverely affected by seepage of crude oil and which A
• therefore required treatment. The learned Arbitrator himself assessed, in
view of the degradation which the land had suffered and the treatment
required that the rate per bush would come to Rs. 75/- each which was
double the value of a tea bush in a case where the land was acquired .
Thus 50 per cent of the compensation awarded representated the cost of
treating the land which had been adversrely affected bt seepage of crude B
oil and suffered degradation Even if the formula adopted by the Arbitrator
is accepted, compensation mustt be awarded for the tea bushes only @
Rs. 37.50 per tea bush, which is 50 per cent of the compensation awarded
by the Arbitrator, since the instant case is a case of acquisition and does
not involve incurring of any expenditure on treatment of the land in C
question. JPara 40 and 41) [1161-A-D)

CIVIL APPELLATE JURISDICTION: Civil Appeal No, 1401 of2007,

From the Judgment and Order dated 21.12.2004 of the High Court of
Guwahati in R.A. No, 54/1998. D
WITH

Civil Appeal No. 1402/2007.

P.K. Goswami, Rajiv Mehta, B. Aggarwal, A. Henry for the Appellant. E
Shanti Bhushan N.R. Choudhary, Sangeeta Mandal, Jayasree Singh,
Swati Sinha, Pragyan Sharma for Fox Manda! & Co., Kirshanan Venugopal,
Momta Oinam, Minakshi Sanna for Corporate Law Group for the Respondents.

The Judgment of the Court was delivered by
F
B.P. SINGH, J. I. These special leave petitions have been preferred
against the judgment and order of the High Court of Assam at Gauhati dated
December 21, 2004 in Review Application No.54 of 1998. Special

Leave Petition No,7182 of 2005 has been preferred by M/s. Green G
View Tea and Industries Ltd. whose lands measuring about 681 bighas, I
katha with tea bushes, drainage system, garden roads, shade trees and other
valuable trees were notified for acquisition under Section 4 of the Land
Acquisition Act by Notification published in Assam Gazette on November
11, 1992. The petitioner in the aforesaid special leave petition has challenged
the compensation awarded by the High Court for the lands in question. H
1148 SUPREME COURT REPORTS (2007] 3 S.C.R.

A 2. Special Leave Petition No.15810 of 2005 has been preferred by Ml
s. Numaligarh Refinery Ltd. for whose benefit the acquisition has been made,
and is directed against the award of compensation for the tea bushes at the
rate of Rs.751- each.

3. Special Leave granted in both these petitions.
B
4. This litigation has a long chequered career. The Notification issued
under Section 4 of the Land Acquisition Act was followed by a declaration
made under Section 6 of the Act. Possession of the lands in question had
been taken invoking the urgency provisions. The Collector by his award of
July 4, 1994 awarded compensation for the lands@ Rs.7,0001- per bigha and
C compensation for the tea bushes @ Rs.15 per tea bush. Dissatisfied with the
award of the Collector Mis. Green View Tea and Industries Ltd. (hereinafter
referred to as the "appellant") sought a reference under Section 18 of the Act
which was made to the District Judge, Golaghat and was registered as L.A.
Case No. I of 1996. By his judgment and order dated November 18, 1996 the
D learned District Judge awarded compensation @ Rs.22,0001- per bigha for
the lands and @ Rs. 751- each for tea bush.

5. The appellants preferred First Appeal No.27 of 1997 against the
award of the learned District Judge contending that the compensation granted
for the lands was inadequate. The Numaligarh Refinery Ltd. (hereinafter
E referred to as the "respondent") as well as the Collector filed appeals before
the High Court being First Appeal No.32 of 1997 and First Appeal No.33 of
1997 respectively. By judgment and order dated June 24, 1998, the High
Court dismissed First Appeal No.27 of 1997 preferred by the appellant while
allowing the appeals preferred by the respondent and the Collector. The High
F Court restored the award of the Collector granting compensation@Rs.7,0001
- per bigha and Rs. 15 per tea bush.

6. The appellant filed a Review Application No.54 of 1998 praying for
the review of the judgment and order of June 24, 1998 dismissing its appeal.
The petitioners also filed Special Leave Petitions before this Court against
G the judgment and order of the High Court aforesaid, but on March 8, 1999
withdrew the Special Leave Petitions in view of the pendency of the review
petition before the High Court. Ultimately, the High Court by its order dated
August 25, 1999 dismissed the review petition.

7. The appellant then filed Special Leave Petition Nos.18180-18182 of
H 1999 against the judgment and order of the High Court dated June 24, 1998
NUMALIGARH REFINERY LTD. •·. GREEN VIEW TEA & INDUSTRIES [B.P. SINGH. J J J J 49

dismissing the First Appeal preferred by the appellant. On November 22, A
1999 the appellant also filed a special leave petition before this Court being
Special Leave Petition No.5417 of 2000 impugning the order of the High
Court dated August 25, 1999 dismissing the review petition.

8. This Court by its order of December l, 1999 dismissed the special
leave petitions preferred by the appellant. Aggrieved thereby the appellant B
filed Review Petition Nos.306-308 of 2000 in which this Court issued notice
on March 8, 2000. The special leave petitions preferred against the order of
the High Court dismissing the review petition and the review petitions filed
by the appellant against the order of dismissal of its special leave petitions
were heard together. By its judgment dated November 9, 2001 this Court C
dismissed the Review Petition Nos.306-308 of 2000 but granted leave in
Special Leave Petition No.5417 of 2000 against the order of the High Court
rejecting the review petition of the appellant. This gave rise to Civil Appeal
No.7692 of 2001.

9. The appeal of the appellant, namely, Civil Appeal No.7692 of2001 D
was allowed by this Court setting aside the order of the High Court and the
matter was remitted to the High Court to be heard and disposed of in
accordance with law. The judgment of this Court in the aforesaid appeal is
reported in 2004, Vol.4 SCC 122. It would be necessary at the appropriate
stage to notice the observations made by this Court in its aforesaid judgment.
E
I0. To complete the narrative, in the light of judgment and order of this
Court the High Court considered the review application filed before it by the
appellant and by its judgment and order of November 21, 2004 partly allowed
the review application in as much as it increased the compensation awarded
for the lands from Rs.7,000/- per bigha to Rs.10876/- per bigha and awarded F
the compensation of Rs.75 for each tea bush. This order of the High Court
partly allowing the review application is challenged before us in these two
appeals.

11. Before adverting to the facts of the case and the evidence produced
by the parties in support of their respective claims, it may be useful to G
broadly indicate even at this stage the thrust of the argument of counsel for
the appellant that the State having itself granted compensation @ Rs.55,000/
- per bigha, which was also at one stage offered to the appellant - company,
and in the light of several awards made, there was no justification for granting
to the appellant - company compensation for the lands. at a rate less than
H
1150 SUPREME COURT REPORTS [2007] 3 S.C.R.

A Rs.55,000/- per bigha. Reliance was also placed on the observations of this
Court to the effect that these were relevant matters to be considered while
awarding compensation in the instant case.

12. The appellant has relied upon the offer made by the State as contained
in its approval dated September 10, 1992. It has further relied on the approval
B of rates for tea lands in the districts of Tinsukia and Dibrugarh, apart from
estimates prepared for some other lands which were sought to be acquired for
Oil and Natural Gas Commission. The appellant has also relied on awards
made in respect of tea lands in the district of Sibsagar Exhibits - 8 and 9. The
appellant has relied on the sale deeds Exhibits 3,4 and 5 and submitted that
C the compensation awarded by the High Court is wholly unjustified and grossly
inadequate.

13. There is no dispute that in the Jamabandi the lands have been
classified as tea class. The lands fall within the district of Golaghat which
earlier formed part of the district of Sibasagar.
D
14. It was strenuously urged before us that the offer made by the State
itself was a very important piece of evidence to be considered, and this aspect
of the matter was emphasized by this Court while remanding the matter to
the High Court on an earlier occasion. Our notice has been drawn to the letter
of the Deputy Commissioner, Golaghat addressed to the Commissioner and •
E Secretary to the Government of Assam, Department of Revenue dated August
20, 1992. In the said letter the Deputy Commissioner has referred to lands
measuring 751.30 acres which was proposed to be acquired for the respondent
to set up its refinery. The Deputy Commissioner proposed for approval of a
uniform bigha rate @ Rs.55,000/- per bigha irrespective of class for both
F Government and patta lands. Reference is made to the lands acquired for
ONGC in the District of Sibsagar for which uniform bigha rate of Rs.55,000/
- was fixed and which had been duly approved by the Government.

15. The Additional Secretary, Department of Revenue wrote to the
Deputy Commissioner, Golaghat by his letter dated September I0, 1992 that
G the Government had approved the. proposal for fixation of uniform rate of
Rs.55,000/- per bigha for both Government and patta lands proposed to be
transferred/acquired for the respondent. It would thus appear that the proposal
made by the Deputy Commissioner, Golaghat was accepted by the Government
and it is further reinforced by Annexure P-6 which is the "Minutes of the
Meeting" held in the Chief Minister's Chamber on 25.2.93. The said Meeting
H
NUMALIGARH REFINERY LTD.•·. GREEN VIEW TEA & INDUSTRIES [B.P SINGH, 1) 1151

was attended by the Minister of Revenue, Member - State Planning Board, A
the Chief Secretary of the State, the Commissioner and Secretary - Industries
etc. on behalf of the Government and the Chairman and Managing Directors
of IBP and other officers on behalf of the respondent. The issue relating to
. fixation of compensation for the land to be acquired for the refinery of the
respondent was discussed and the following decision was taken:-
B
"I. For Patta land compensation for per bighas should not exceed
Rs.55,000/- per bigha all inclusive.

For this purpose additional Secretary, Revenue and Joint Secretary,
Industries have been authorized to make a filed visit and discuss the
matter with the Deputy Commissioner, Golaghat so that there is no C
problem in taking over this land and handing it over to IBP for
construction of the Refinery.

If this team arrives at a final decision to pay Rs.55,000/- per
bigha then the Deputy Commissioner will complete formal proceeding
and compensation will be paid through the deputy commissioner. D
In case the negotiations cannot be arrived as Rs.55,000/- per bigha
all inclusive then the land acquisition proceeding would continue".

However, for the Government land premium @ Rs.35,000/- per bigha was
~d E
16. It appears that the offer made by the State Government was not
acceptable to the appellant and, therefore, the matter had to be re-considered
by the Government since it was not possible to acquire the land on the basis
of agreed compensation. Thus, the Revenue Secretary by his letter of April
2, 1993 wrote to the Deputy Commissioner and Collector, Golaghat informing F
him that since land acquisition proceedings under the provisions of the Land
Acquisition Act have been taken up by the Collector, Golaghat for acquisition
of the lands in question, the valuation of the land should be fixed at market
value of the land on the date of publication of Notification under Section 4
(I) of the Act and other relevant factors as per prescribed provisions of the G
Act. It was clarified that since the valuation of the land at Rs.55,000/- per
bigha was not determined as per the provisions of the Land Acquisition Act,
the decision of the Government as contained in its letter dated September I 0,
1992 forwarded by message dated September 21, 1992 was cancelled.
Apparently, since Notification under Section 4 of the Act was issued on
H
I! 52 SUPREME COURT REPORTS [2007) 3 S.C.R.

A November 11, 1992 and the matter had to be considered in the light of the
provisions of the Act, the Government cancelled its earlier offer in view of
the proceedings taken under the Act to detennine the market value.

17. The second set of documents on which reliance was placed by the
appellant are the orders of the Deputy Commissioner, Dibrugarh issued in
B June, 1992 wherein it was stated that the valuation (categorywise) have been
fixed for the lands which were acquired/ taken over by Oil India Ltd. in the
year prior to 1990 and which remained pending for payment. The order
stated that the fixation of value of lands had been arrived at after considering
the market price of land prior to 1990 alongwith interest payable on them.
C Hence it was ordered that the rates fixed in the aforesaid order shall be
applicable to pending cases of the period prior to the year 1990. The land
value of "Rural Area viz Paddy Field and Tea Cultivation Area" was fixed
at Rs.60,000/- per bigha and the rate fixed for "Land unfit for cultivation viz.
rocky areas, sandy areas, Jaldube areas etc." was fixed at Rs.40,000/- per
bigha. A similar order was passed by the Deputy Commissioner, Tinsukia
D district on August 4, 1992 which also related to lands acquired/ taken over
by Oil India Ltd. during the period prior to June 26, 1990. The same rates
were fixed for tea cultivation area and land unfit for cultivation.

18. These two orders do establish that the rate for tea lands was
determined in respect of lands acquired prior to year 1990, at the rate of
E Rs.60,000/- per bigha. This, however, included the element of interest payable
to the claimants as also inclusive of all concessions. Therefore, from the
decision of the Government communicated by letter dated September 10,
1992 in respect of the lands in question as also the two orders issued by the
Deputy Commissioners of Tinsukia and Dibrugarh it is clear that the price
p was "all inclusive" meaning thereby that nothing beyond the amount mentioned
therein would be payable to the land owners. This was apparently so because
the price was being fixed by agreement and not after following the procedure
prescribed under the Land Acquisition Act. The State therefore did not incur
the statutory liability to pay solatium, interest etc. apart from the price
detem1ined in accordance with the rates mentioned therein.
G
19. The next set of documents on which reliance was placed by the /
appellant are the two estimates of the probable cost of acquisition of land '
under the Land Acquisition Act. Exhibit - 6 related to the district of Sibsagar
and is dated April 23, 1992 and Exhibit - 7 which also relates to district
H Sibasagar is dated May 25, 1992. In both cases probable rate was shown to
NUMALIGARH REFINERY LTD.•·. GREEN VIEW TEA & INDUSTRIES [B.P. SINGH. J.) J J 53

be Rs.55,000/- per bigha. A
20. The appellant also relied on two awards made by the Collector
under the Act relating to lands acquired in the district of Sibasagar. These
awards are dated August 12, 1995 and December 13, 1995 and relate to
acquisitions made under Notifications issued under Section 4 of the Land
Acquisition Act on May 23, 1994 and May 24, 1994. Having regard to the B
amount awarded the rate would work out to approximately Rs.55,000/- per
bigha. Counsel for the appellant emphasized that the new district of Golaghat
where the lands in question are situated formed part of the district of Sibsagar
before the new district of Golaghat was carved out. The appellant also relied
on three sale deeds Exhibits 3, 4 and 5 to prove that the rate at which lands C
were sold between February 12, 1985 and May 12, 1992 varied from
Rs.40,000/- to Rs.50,000/- per bigha.

21. Relying on all these documents the appellant contended that the
compensation awarded by the High Court @ Rs. I 0,876/- per bigha was grossly
inadequate. The Collector ought to have awarded compensation at least @ D
Rs.55,000/- per bigha if not more. There was no reason why the documentary
evidence on record should not be relied upon particularly when they related
to offer made by the State Government. Those documents disclosed that the
rate was about Rs.55,000/- per bigha as evidenced by awards made by the
Collector and estimates prepared by the Department of the State Government.
It was further submitted that of the three sale deeds produced before the E
Court the highest rate should have been accepted which was Rs.50,000/-
evidenced by sale deed dated February 12, 1985. It was submitted that even
if some deduction was allowed on account of plot being small, the increase
in value of land over 7 years had also to be taken note of.
F
22. Learned counsel appearing on behalf of the respondent submitted
that the earlier offer made by the State Government for the lands in question
@ Rs.55,000/- was cancelled since the appellant did not accept the same and
it became necessary to resort to the process of acquisition under the Land
Acquisition Act. Learned counsel sought to justify the rate of Rs. I 0,876/- per
bigha. He has referred to Exhibit - 3 which is the calculation on the basis of G
which the rate of Rs. I 0,876/- per bigha was worked out. The chart discloses
that the sale deeds in respect of 5 plots of land were taken into consideration.
These sale deeds related to the period 1988 to 1992 and the average price
worked out to Rs.10,876/-. It was not disputed before us that one of the plots
sold was homestead land while the others have been described as "faringati" H
1154 SUPREME COURT REPORTS [2007] 3 S.C.R.

A lands which we are told are lands which are not suitable for cultivation. Be
that as it may, what is obvious is the fact that the lands referred to therein
are not of the same category as lands with which we are concerned in these
appeals namely, tea class lands. Moreover, the government itself did not
agree with this valuation as is evident from the letter of the Revenue
B Department dated July 22, 1993 in which it was pointed out that the inclusion
of homestead land (Bari Class) enhanced the average price of the lands which
was not acceptable to the Government. Necessary instructions were issued to
keep this in mind while preparing the estimates.

23. The High Court in substance has restored the value of lands as
C worked out in the aforesaid chart prepared in the office of the Deputy
Commissioner and Collector, Golaghat.

24. It was contended that the three sale deeds on which the appellant
relied related to small plots by the side of the road and, therefore, the plots
were not comparable with the lands subject matter of the acquisition. In fact
D the best evidence was the purchase of the lands in question by the appellant
itself in the year 1987. It was sought to be urged before us that by registered
sale deed of September 7, 1987 the appellant had purchased the partnership
firm together with other lands movable and immovable properties including
all rights and interests from the partnership firm which earlier managed the
Tea Estate. Under the said deed only a sum of Rs. 2,45,424/- was paid for
E purchase of the entire Estate by the partnership firm. This document was
never produced before the Reference Court and, therefore, the appellant
strongly objected to this document being looked at by the Court. Apart from
the fact that this document was never produced before the Reference Court,
there is another objection to the taking into account the price paid by the
F appellant for the purchase of the partnership firm which earlier managed the
tea company. Since, the entire partnership firm was taken over with its assets
and liabilities, the price paid did not represent merely the price of the lands
but also the other assets as diminished by the liabilities. Learned counsel for
the respondent submitted that the value of the lands could be worked out by
taking into account the total assets as well as total liabilities of the firm. We
G are afraid such a procedure cannot be permitted for land acquisition cases. If
the price paid did not represent the price of the lands purchased, it cannot be
taken as evidence of the value of the land.

25. Referring to the rates fixed for acquisition/taking over of lands in
H the districts of Dibrugarh and Tinsukia it was submitted that there was no
NUMALIGARH REFINERY LTD.•. GREEN VIEW TEA & INDUSTRIES (BP. SINGH, JI 11 SS

evidence with regard to the location of these lands and also with regard to A
other parameters that were relevant. Dibrugarh and Tinsukia were more
developed than the district of Golaghat. It was, therefore, submitted that the
orders relied upon were not of any help to the appellant. Lastly, it was
submitted that the awards made by the Collector under the Land Acquisition
Act relied upon by the appellant related to the district of Sibasagar and not B
the district of Golaghat.

26. Learned counsel for the respondent has also cited several decisions
of this Court before us but we do not consider it necessary to refer to them
since they all reiterate the principles fairly well established over the years
laying down norms for assessing the market value of the lands acquired. C
27. Before considering the submissions urged before us it is usefu 1 to
notice the observations of this Court while remanding the matter to the High
Court for re-consideration of the Review Petition. This Court observed:-

"This first thing that strikes us is that when the proposal of acquisition D
of land was mooted, the Deputy Commissioner himself was of the
view that the compensation payable should be at the rate of
Rs.55,000/- per bigha. The State Government considered this and
then agreed to the same. Ultimately, this compensation would have to
be paid by the beneficiary of the land acquisition namely the oil E
refinery.

Secondly, the appellant had placed on record the awards made in
the case of other similarly situated tea estates nearby showing that in
each of these cases, the Government had directed compensation at
the rate of Rs.55,000/- per bigha. F
Thirdly, an order of the State Government issued by the Collector
and Deputy Commissioner, Tinsukia dated 4th August 1992 and an
order of the District Collector and Deputy Commissioner Dibrugarh
were placed on record, which indicate land value of different
categories. They are as under:- G
I. Highly developed commercial Rs.2,00,000/- per bigha
places within notified area

2. Urban area (the recognized Rs.1,20,000/- per bigha
towns within notified area) H
1156 SUPREME COURT REPORTS [2007] 3 S.C.R.

A 3. Semi-urban area (the area Rs.1,20,000/-per bigha
beyond the notified area but
within two miles radius of
the town either revenue
or municipal town)
B 4. Rural area viz. paddy field Rs. 60,000/- per bigha
and tea cultivation area
5. Land unfit for cultivation Rs. 40,000/- per bigha
viz. rocky areas, sandy
areas, jaldube areas etc.
c Thus, it would be seen that, even according to the State
Government, if the land was unfit for cultivation and comprised only
rocky areas, sandy areas or jaldube areas, the amount of compensation
payable was at the rate of Rs.40,000/- per bigha. As against this the
Collector was directed to fix the compensation at the rate ofRs.7,000/
D - per bigha and the District judge enhanced it to Rs.22,000/- per
bigha. Surely, the tea estate land was much more valuable than "land
unfit for cultivation". It is nobody's case that the tea estate's land was
uncultivated or that there was no tea bushes growing thereupon. l

Fourthly, the oral evidence on record showed that, at all stages,
E the Government was prepared to pay Rs.55,000/- per bigha and. it
was only the appellant who had taken a rigid stand demanding a
higher price.

Fifthly, Exhibits 6, 7 & 8 placed on record prima facie seem to
be similar cases of acquisition of land in Sibsagar District, wherein
F for arable land the estimate of compensation payable made, by the
Government itself was Rs.55,000/- per bigha. Exhibit 8 was the case
of acquisition of tea class land, which also showed the compensation
payable at the same rate as the Government had initially agreed to
pay.
G
Sixthly, even if the High Court disagreed with the valuation of
tea bushes made by the District Judge, being the Court of first Appeal,
it would have had to itself fix the compensation for the tea bushes.
This, the High Court failed to do. All this on record appears to have
escaped the notice of the High Court".
H
NUMALIGARH REFINERY LTD."· GREEN VIEW TEA & INDUSTRIES [B.P. SINGH. J.] 1157

28. Having considered all aspects of the matter we have reached the A
conclusion that the compensation awarded by the High Court is inadequate
and requires m9dification. In the first instance, the government itself suggested
that the appellant may be compensated by working out the compensation @
Rs.55,000/- per bigha. The proposal made by the Deputy Commissioner in
respect of the lands in question was acceptable to the government.
Unfortunately, the appellant did not agree to accept the offer made by the B
State Government and, therefore, it became necessary to resort to acquisition
proceedings under the Land Acquisition Act. This appears to us to be a very
important piece of evidence, and the mere fact that the Government later
cancelled its decision because the appellant did not agree to the rates suggested,
will not make much of a difference. The documents do establish that the C
government itself was willing to pay compensation for the lands @ Rs.55,000/
- per bigha, but the appellant thought that the rate offered was inadequate.

29. The decision of the government to offer compensation@ Rs.55,000/
- per bigha is not an isolated instance because in other districts as well a
similar rate was offered. At least two such orders were produced before us D
which related to the districts of Dibrugarh and Tinsukia. An all inclusive
price of Rs.60,000/- per bigha was offered for tea class lands. The amount
offered included the element of interest as well, and related to an earlier
period namely the period before the year 1990 since the acquisitions/ take
over in those cases related to the period prior to 1990. This certainly gives E
a clear picture as to the value of tea class lands in different districts of the
State. The submission urged before us that the proximity of the lands in
question was an important consideration cannot be over-looked. It is true that
if there was evidence to prove that tea class lands were sold in the vicinity
of the lands in question at a particular rate, the Court could not have ignored
such sale transaction and the price paid. However, in the instant case, we are F
concerned with a tea garden. It was not disputed before us that such tea
gardens are to be found in many districts of the State of Assam. Having
regard to the fact that in the districts ofDibrugarh and Tinsukia compensation
at the same rate was awarded, it appears that the value of tea class lands did
not vary much on account of their location in different districts. The two G
instances relied upon by the appellant provides evidence to the effect that tea
class lands in different districts, in the absence of special features, had the
same value. These rates were fixed in the year 1992, only a few months
before Notification under Section 4 of the Land Acquisition Act was issued
in respect of the lands in question. The High Court rejected these valuations
H
1158 SUPREME COURT REPORTS (2007] 3 S.C.R.

A observing:-
"The price offered for lands in other districts may be a good piece of
evidence, but the districts referred to i.e. namely - Sibasagar and
Dibrugarh are far away from Golaghat District. That apart, the price
paid for the lands in those districts do not appear to have been tested
B in any court of law. The payment in those cases might have been on
the higher side. We, therefore, order payment after recalculation at
the rate of Rs.10,876/- per bigha as determined by the Collector".

We do not approve the approach of the High Court.

C 30. The two estimates prepared by the Collector of Sibasagar dated
April 23, 1992 and May 25, 1992 also give some indication as to the value
of tea class lands and it is not a mere co-incidence that in those estimates as
well the cost of acquisition worked out was @ of Rs.55,000/- per bigha.
Similar is the case with the two awards made in respect of tea class lands
D acquired in the district of Sibasagar where also the rates worked out to about
Rs.55,000/- per bigha. Notification in respect of both these acquisitions was
issued in May 1994, while Notification under Section 4 of the Act was issued
on November 11, 1992 in the instant case. However, viewed from a realistic
angle, it would appear that the compensation awarded under the two awards
would work out to much more that the "all inclusive offer" of Rs.55,000/- per
E bigha, because the claimants in those cases will also be entitled to solatium
and interest etc. which itself would considerably increase the total
compensation payable to the claimants.

31. So far as the sale deeds are concerned. They no doubt relate to
small plots but the best price offered was one under sale deed dated February
F 12, 1985 which was@ Rs.50,000/- per bigha. Even if we reduce the value
by about 30% on account of smallness of the plots but enhanced the price @
I 0% per year since the sale deed related to a period approximately 7 years
earlier, it would again work out to a figure not less than Rs.55,000/- per
bigha.

G 32. The High Court has determined the rate of compensation basing
itself on a proposal made by the Deputy Commissioner which was not even
accepted by the Government. Moreover, the sale instances taken into account I-
did not relate to tea class lands but related to "firangati" lands which fall
under a lower category.
H
NUMALIGARH REFINERY LTD •·.GREEN VIEW TEA & INDUSTRIES [B.P. SINGH, l] 1159

33. The question then is as to what should be the rate at which A
compensation should be awarded for the lands in question. In doing so, we
must bear in mind the fact that the offer made by the Government was an all
inclusive offer of Rs.55,000/- per bigha. If the appellant had accepted the
offer, it would not have been necessary for the State to initiate a proceeding
for acquisition under the Land Acquisition Act and, thereafter, to contest the B
protracted litigation. The State would not have been liable to pay solatium,
interest etc. The grant of compensation @ Rs.55,000/- per bigha under the
Land Acquisition Act is, therefore, not justified. It has been often said that
fixation of compensation under the Land Acquisition Act involves an element
of rational guess work. We are of the view that having regard to the evidence
on record compensation worked out @ Rs.35,000/- per bigha for the lands C
would be fair and adequate because the appellant would also be entitled to
statutory benefits such as solatium and interest thereon. We accordingly hold
that the appellant is entitled to compensation for the lands @ Rs.35,000/- per
bigha apart from all statutory benefits to which it may be entitled by way of
solatium, interest etc.
D
34. The next question is as to what compensation should be awarded
for the tea bushes standing on the acquired lands. The Collector had offered
compensation@ Rs.15/- per tea bush which had been enhanced to Rs.75/-
per tea bush by the Reference Court. In the earlier round of litigation the
High Court reduced it to Rs.15/- per tea bush but after remand the High E
Court has approved the rate of Rs.75/- per tea bush.

35. According to the respondent and the Collector compensation for tea
bushes should be fixed on the basis of Krishnamurthy formula which was
formulated in the year 1972 by Shri Krishnamurthy, the then Secretary,
Department of Revenue. On the other hand, counsel for the appellant submitted p
that the aforesaid Krishnamurthy formula was considered in an award given
by a former Chief Justice of the Assam High Court which award was approved
by the High Court. The learned Arbitrator noticed the Krishnamurthy formula
but in the circumstances found that the compensation needed to be enhanced
considerably.
G
36. As noticed by the High Court, the Krishnamurthy formula laid
down two governing factors for determining compensation for tea bushes
namely; (I) cost of fresh plantation not exceeding Rs.45,000/- per hector (2)
annual net profit from tea bushes per hector Rs. I0,000/-. The same formula
was commended for our acceptance. On the other hand, the High Court by
H
1160 SUPREME COURT REPORTS (2007] 3 S.C.R.

A its impugned judgment and order has fixed the rate of Rs.75/- per tea bush
on the basis of the award of Justice S.K. Dutta which was approved by a
Division Bench of the Assam High Court.

37. Counsel for the respondents submitted that even if the formula
adopted by the Arbitrator is accepted and the compensation calculated thereon,
B the compensation will not be Rs.75/- per tea bush but only Rs.37.50 per tea
bush.

38. There is substance in the submission of learned counsel for the
respondent and the Collector. The dispute referred to the learned Arbitrator ..
in the case of Lakwah Tea Company Ltd. related to damage done to the tea
C garden of Lakwah Tea Company Ltd. on account of crude oil and sludge
entering the garden damaging the tea bushes as well as the nursery. The
damage was mainly on account of crude oil getting mixed up with flood
water. It was in a dispute of such nature that an award was made by the
Arbitrator. The learned Arbitrator notked the Krishnamurthy formula and
D observed :-
"The instant case is different from cases in which the land with tea
bushes is acquired. This is not a case of requisition. In this case the
tea bushes will have to be replanted on the land which was affected
by oil and from which the damaged bushes are uprooted".
E 39. The learned Arbitrator observed that in cases where land with bushes
is acquired compensation for land is paid so that the person concerned can
buy a similar land, and compensation for tea bushes is paid as cost of fresh
plantation and for loss of crops. In that case the Arbitrator found that the tea
bushes had to be uprooted and the land had to be prepared for cultivation by
F adopting the procedure for treatment of the land so as to rehabilitate the land.
According to the evidence available in that case the rehabilitation of land
could take about two years and if crude oil was deposited it would take
longer time on account of the treatment process to be applied. In these
circumstances, the learned Arbitrator concluded:-

G "Hence replantation cost will be very high and the loss of crops will
be much higher than in a case in which land with tea bushes is
acquired. Thus the value of a tea bush in the instant case will be
about double of the value of a tea bush in a case where the land is
taken, I therefore fix Rs. 75/- as the value of a tea bush in the instant
case will be about double of the value of a tea bush in a case where
H the land is taken, I therefore fix Rs.75/- as the value of a tea bush in
NUMALIGARH REFINERY LTD. "· GREEN VIEW TEA & INDUSTRIES [B.P. SINGH, J.] 1161
the instant case with observation that it is on the lowers". A
40. It would thus be seen that the award of the Arbitrator fixing the rate
of Rs.75/- per tea bush took into account the cost of re-habilitation of the
land which was adversely affected by seepage of crude oil and which therefore
required treatment. The learned Arbitrator himself assessed, in view of the
degradation which the land had suffered and the treatment required that the
B
rate per bush would come _to Rs.75/- each which was double the value of a
tea bush in a case where the land was acquired. Thus 50 per cent of the
compensation awarded represented the cost of treating the land which had
been adversely affected by seepage of crude oil and suffered degradation.
c
.. 41. We are therefore satisfied that even if the formula adopted by the
Arbitrator is accepted, compensation must be awarded for the tea bushes only
@ Rs.37.50 per tea bush, which is 50 per cent of the compensation awarded
by the Arbitrator, since the instant case is a case of acquisition and does not
involve incurring of any expenditure on treatment of the lands in question.
We, therefore, accept the submission urged on behalf of the respondent and
the Collector that the compensation for tea bushes @ Rs.75/- each is excessive
and ought to be reduced to Rs.37.50 for each tea bush. We order accordingly.

42. In the result Appeal arising out of the Special Leave Petition (c)
No.7182 of2005 is partly allowed and the compensation for the land acquired E
is determined at the rate of Rs.35,000/- per bigha instead of Rs.10,876/- per
bigha as awarded by the High Court. Appeal arising out of the Special Leave
Petition (c) No.15810 of 2005 is also partly allowed in as much as the
compensation for te1,1 bushes is reduced from Rs.75/- to Rs. 37.50 per tea
bush. The C:>llector is directed to re-calculate the compensation payable to
the claimant and pay the same together with such statutory benefits to which F
it may be entitled under the Act. The parties shall bear their own costs.

A.K.T. Appeal partly allowed.