Holding

Compensation for acquired land must include the value of fruit‑bearing trees and be determined using an eight‑year multiplier; any separate award or price‑index enhancement is illegal.

Summary

The State of Haryana appealed a High Court order that had confirmed the market value of land acquired in Panchkula and further increased compensation for fruit‑bearing trees by 60% based on a price‑index adjustment. The Collector had originally awarded separate compensation for the land and the trees, a practice the State argued was contrary to the Land Acquisition Act. The Supreme Court held that compensation for acquired land must include the benefits of fruit‑bearing trees and therefore cannot be determined separately; the market value should be based on the yield and an eight‑year multiplier applied for tree‑bearing land. The Court also ruled that the High Court could not enhance the tree compensation using the price index, as the Collector's award, despite its error, constitutes an offer that cannot be reduced under Section 25 of the Act. Consequently, the appeal was allowed, the High Court judgment set aside, and the Collector’s original award affirmed.

Issues considered

Whether compensation for land and fruit‑bearing trees can be determined separately under the Land Acquisition Act.
What multiplier is appropriate when market value is determined on the basis of yield from trees.
Whether a court may enhance compensation awarded by the Collector using a price‑index adjustment.
Whether the Collector's award can be disturbed under Section 25 of the Land Acquisition Act.

Legislation cited

Land Acquisition Act, 1894s. 18, s. 23(1), s. 25, s. 3(a), s. 4(1)

Subjects

Land acquisitionCompensationFruit‑bearing treesMarket valueMultiplierPrice indexSection 25Section 4(1)Section 23(1)Agricultural land valuation

Judgment

A STATE OF HARYANA
4--
v.
GURCHARAN SINGH AND ANR. ETC.
.
...
JANUARY 18, 1995

B [K. RAMASWAMY AND N. VENKATACHALA, JJ.)

Land Acquisition Act, 189~Sections 4(1) & 23(1)-Acquisition of '
·T-
land with frnit bearing trees-Determination of compensation-Method-
Compensation for land as well as fruit bearing trees cannot be determined
c separately--8 years multiplier shall be appropriate multiplier.

The land situated in Panchkula was acquired by a notification
published u/s 4(1) of the Land Acquisition Act. The Land Acquisition
Collector awarded the market value to the land. In addition, he also
awarded compensation to the fruit bearing trees. On reference, award of
D the Collector was confirmed. On appeal, the High Court by confirming the >-
market value of the land, enhanced the compensation for the fruit bearing
trees by 60% of what was awarded by the Collector. Hence this Appeal.

The appellant State contended that the High Court committed grave
error of law in upholding the determination of the compensation both to
E
the land as well as fruit bearing trees and also enhancing the market value
of the fruit bearing trees.

The respondent submitted that considering the rise in price index,
:rl-
the High Court was right in increasing the compensation to the fruit
F bearing trees by 60%

AllOwing the appeals, this Court

HELD : 1.1. It is settled law that the Collector or the court who
determines the compensation for the land as well as fruit bearing trees
G cannot determine them separately. The compensation is to the value of the
acquired land. The market value is determined on the basis of the yield. ,,...
Then necessarily applying suitable multiplier, the compensation need to
be awarded. Under no circumstances the court should allow the compen-
sation on the basis of the nature of the land as well as fruit bearing trees.
H In other words, market value of the land is determined twice over; once on
408
STATEOFHARYANAv. G.SINGH 409

the basis of the value of the land and again on the basis of the .yield got A
from the fruit bearing trees. The definition of the land includes the benefits
which accrue from the land as defined in s.3(a) of the Act. After compen-
sation is determined on the basis of the value of the land from the income
applying suitable multiplier, then the trees would be valued only as fire·
wood and necessary compensation would be given. (410-G-H, 411-AJ
B
1.2. When the market value is determined on the basis of the yield
from the trees or plantation, 8 years multiplier shall be appropriate
multiplier. (411-CJ

1.3. Though the Collector had committed palpable error of law in C
separately awarding the compensation to the land as well as fruit bearing
trees it is an offer which cannot be disturbed because of section S of the
Land Acquisition Act. The· rate of compensation should have less than
what the Collector had awarded, the Court cannot reduce the amount to
than the amount offered by the Collector. The Collector, civil court and
the High Court should have applied 8 years multiplier and determined the D
compensation. They awarded much more than what the claimant would
justly and fairly be entitled to Therefore, further enhancement of 60% by
the High Court on the basis of the Price Index was illegal. [411-E-F]

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 4974-76 E
of 1985 Etc.

From the Judgment and Order dated 21.5.81 of the Punjab &
Haryana High Court in R.FA. Nos. 1137, 1138 and 1354 of 1979.

Ms. Suruchi Agarwal and Ms. Indu Malhotra for the Appellant.
F
S.K. Bagga and Mrs. Tanuj Bagga for the Respondents.

The following Order of the Court was delivered :

This appeal arises from the judgment and decree of the High Court
of Punjab & .Haryana in RSA No .. 1137 of 1970 and batch dated May 21, G
1981. An extent of 20 acres 38 cents was notified and published for
acquisit~on in the State Gazette under s.4(1) of the Land Acquisition Act
on June 22, 1974 for residential colony. The lands are situated in
Panchkula, near Chandigarh, as satellite town. The Land Acquisition Col-
lector (for short 'the Collector') awarded the market value in his award H
410 SUPREME COURT REPORTS (1995] 1 S.C.R.

A dated June 25, 1976, to t_he Abadi land at the rate of Rs. 12.240 per acre
and to the Gheir Mumkin Land @Rs. 1200 Per acre. In addition, he also
awarded compensation to the fruit bearing trees in the respective appeals
as follows :•

R.F.A. No. 1137 of 1979 = Rs. 1,12,993.50
B
R.F.A. No. 1138 of 1979 = Rs. 1,56,659.40

R.F.A. No. 1354 of 1979 = Rs. 40,842.00

R.F.A. No. 1355 of 1979 = Rs. 1,65,688.00
c
On reference under s.18, in his award and decree dated December
12, 1978, the Addi. District Judge affirmed the award of the Collector. In
other words, he passed nil award. On appeal, the High Court by confirming
the market value of the land, enhanced the compensation for the fruit
D bearing trees by 60% of 'what was awarded by the Collector and accord-
ingly granted enhanced compensation with statutory benefits. Thus this
appeal by special leave.

Ms. Suruchi Agarwal, learned counsel for the State, contended that
the High Court has committed grave error of law in upholding the deter-
E mination of the compensation both to the land as well as fruit bearing trees
and has also further committed error in enhancing the market value of the
fruit bearing trees in addition to the confirmation of the compensation
separately awarded for the land and the fruit bearing trees. It is against the
settle principle of law as laid down by this court in catena of decisions. We
F find force in the contention. Sri Bagga, learned counsel for the respon-
dents, contended that in the year 1966 the price index was at 144 point
whereas in 1970 the index was found to be at 213 points. The High Court,
therefore, was right in increasing the compensation to the fruit bearing·
trees by 60%. We find no force in the contention. It is settled law that the
Collector or the court who determines the compensation for the land as
G well as fruit bearing trees cannot determine them separately. The compen-
sation is to the value of the acquired land. The market value is determined \
~-

on the basis of the yield. Then necessarily applying suitable multiplier, the
compensation need to be awarded. Under no circumstances the court
should allow the compensation on the basis of the nature of the land as
H well as fruit bearing trees. In other words, market value of the land· is
STATEOFHARYANAv. G. SINGH 411

determined twice over, and once on the basis of the value of the land and A
-+ again on the basis of the yield got from the fruit bearing trees. The
definition of the land includes the benefits which accrue from the land as
defined in s.3( a) of the Act. After compensation is determined on the basis
of the value of the land from the income applying suitable multiplier, then
the trees would be valued only as fire wood and necessary compensation
would be given. In this case, the High Court did not adopt this procedure.
B
We have looked into the figures furnished in the judgment of the High
l Court of the amount awarded by the Officer himself. He too while deter-
mining the compensation at the rate of Rs.12,240 per acre on the basis of
the yield applied a multiplier of more than 8 years. Under no circumstan-
ces, the multiplier should be more than 8 years multiplier as it is settled c
law of this court in catena of decisions that when the market value is
determined on the basis of the yield from the trees or plantation, 8 years
multiplier shall be appropriate multiplier. For agricultural land 12 years
multiplier shall be suitable multiplier.

....... In this case, the Collector applied more than 8 years multiplier and
D
awarded compensation. The High Court also has no adverted to this aspect
of the matter. The High Court committed error of law in further enhancing
the compensation. Considered from this perspective, since we cannot
interfere with the award of the Collector, though the Collector had com-
mitted palpable error of law in separately awarding the compensation to E
the land as well as fruit being trees, it is an offer which cannot be disturbed
because of s.25 of the Acts. The rate of compensation shbuld have been
less than what the Collector has awarded, we cannot reduce the amount to

- ~ less than the amount offered by the Collector, yet we have to hold that the
Collector, civil court and the High Court should have applied 8 years
multiplier and determined the compensation. They awarded much more
F

..
than what the claimant would justly and fairly be· entitled to. Therefore,
further enhancement of 60% by the High Court on the basis of the Price
Index is clearly illegal.

The appeals are accordingly allowed. The Judgment and decree of G
/._ the High Court is set aside and the award and decree of the reference
Court is affirmed. In the circumstances of the case, the parties are directed
to bear their own costs.

A.G. Appeals allowed.