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IN SUPREME COURT OF INDIA Page 1 of 3

CASE NO.:
Appeal (civil) 8245 of 2004

PETITIONER:
Assistant Commissioner-cum-Land Acquisition Officer, Bellary

RESPONDENT:
Sri S.T. Pompanna Setty

DATE OF JUDGMENT: 17/12/2004

BENCH:
Ruma Pal & C.K. Thakker

JUDGMENT:
J U D G M E N T

(Arising out of Special Leave Petition (c) No. 16181 of 2003)

Thakker, J.

Delay condoned.

Leave granted.

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 order.
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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 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 that basis.
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
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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\026=, 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 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 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.