The Revenue Divisional Officer, (Land Acquisition Officer) and The Superintending Engineer vs N. Janaki Ammal

V. Ramasubramanian, J.—The land of the extent of 0.48.0 hectares in Survey No. 357/3A1, Parapatti Village, Hamlet of Viswanatham

Village, Sathur Taluk, Sivakasi District, belonging to the respondent herein, was acquired by the Government for the purpose of upgrading the

existing Electricity Sub Station. An award was passed in Award No. 3 of 1990 dated 26.2.1990, granting a total compensation of Rs. 51,100/-,

comprising of Rs. 17,784/- towards value of land, Rs. 17,957.50 towards value of trees and the balance towards solatium etc.

On a reference u/s 18 of the Land Acquisition Act, 1894, in L.A.O.P. No. 127 of 1992, the Tribunal, viz., Sub Court, Srivilliputhur, enhanced

the compensation to Rs. 24,26,000/- together with solatium and interest, by a judgment dated 28-4-1993. Aggrieved by such enhancement, the

Referring Officer as well as the beneficiary viz., the Tamilnadu Electricity Board filed an appeal in A.S. No. 282 of 1994, on the file of this Court.

Finding that the evidence of PW-2 and his Report Ex.A-6, on the basis of which the Tribunal adopted the capitalisation method for arriving at the

compensation, was wholly unreliable, this Court set aside the judgment of the Tribunal. However, this Court remitted the matter back to the

Tribunal for a fresh consideration, in view of the additional documents sought to be filed by both parties.

After remand, both parties let in additional evidence, oral as well as documentary, and the Tribunal passed a fresh judgment dated 13-1-1999,

determining the compensation payable as Rs. 21,72,000/-, to be paid together with solatium and interest. It is against the said judgment that the

Referring Officer and the Electricity Board have come up with the present appeal.

We have heard Mr. K.M. Vijayakumar, learned Additional Government Pleader appearing for the appellants and Mr. M.S. Balasubramania

Iyer, learned Counsel appearing for the respondent.

In this case, the notification u/s 4(1) of the Act, was approved by the Government in G.O.Ms. No. 2371, Public Works Department, dated

10.12.1987. But even before the issue of the notification, the Government took possession of the land on 28.9.1987, with the consent of the

respondent/landlady. This is seen from Exx.B-5, B-6, B-7, B-29 and B-30 and this fact is also admitted by the respondent.

The land acquired, was of the extent of 0.48.0 hectares in Survey No. 357/3A1, in so far as the respondent herein is concerned. Another small

extent of land was also acquired simultaneously, but it is not the subject matter of dispute in this appeal. It is admitted by the appellants that in the

acquired land of the extent of 0.48.0 hectares, there were a total of 405 trees, whose break up is as follows:

(i) Coconut - 65

(ii) Luckknow Guava - 85

(iii)Lemon - 135

(iv)Silk Cotton - 85

(v) Karuvepilai � 25

(vi)Mathulai - 10

--------

Total 405

========

Before possession was taken over, an inspection of the land was carried out by the Assistant Director of Horticulture, Srivilliputhur, on 20.1.1987.

He submitted a Report dated 2.2.1987, which was filed as Ex.B-9. This Assistant Director of Horticulture was also later examined as RW-5 on

the side of the Referring Officer and Beneficiary. As per Ex.B-9 and the evidence of RW-5, the above trees were more than two years old at the

time of his inspection. The Assistant Divisional Engineer and Assistant Executive Engineer, Tamil Nadu Electricity Board, who took possession and

handed over charge, have also recorded in their Ex.B-7 Report that there were the above trees in the land in question.

The above break up is almost admitted by the respondent/land owner and there is no big dispute about the number and type of trees standing on

the land. The only difference in the break up given in Ex.B-9 and the break up claimed by the respondent is with respect to Silk Cotton trees. The

respondent claims that the total number of Silk Cotton trees is 95 as against the number 85 given in Ex.B-9. Thus there is no serious dispute on the

number of trees. However there was a dispute with regard to the age of those trees, their yield, the income derived and the multiplier to be applied,

for arriving at the market value. While the appellants claimed that the above trees had not yet become fruit-bearing at the time of taking possession,

the respondent-landlady claimed that the trees were more than six years old and were fruit-bearing. Therefore the respondent wanted

compensation to be paid by applying the capitalisation method.

But the Land Acquisition Officer accepted the Reports of the Assistant Director of Horticulture and the Revenue Divisional Officer dated

2.2.1987 and 11.8.1987 respectively, filed as Exx.B-9 and B-32 respectively. Consequently, the Land Acquisition Officer valued the land

separately on the basis of the sale of comparable lands in the locality and valued the trees, on the basis of the expenditure that the landlady would

have incurred, for planting, rearing and nourishing the trees.

For arriving at the market value of the land alone, the Land Acquisition Officer considered the statistics relating to 486 sales transactions that

happened in a period of 3 years immediately prior to the date of publication of the notification u/s 4(1). Out of them, 22 transactions were rejected

on the ground that the lands covered by them were of a soil of different quality and classification. 427 sale deeds were rejected on the ground that

they covered small extents of land sold for house site purposes only. 25 sale deeds were rejected on the ground that they related to lands situate

more than half a kilometer away from the acquired land. 8 sale deeds were rejected on the ground that sale deeds from nearest location are

available.

Thus, 482 out of 486 sale deeds were rejected by the Land Acquisition Officer. Out of the remaining 4, 2 related to the sale of small extents

for house sites, made by the owner herself. Therefore they were also discarded. In the remaining 2 sale deeds, two portions of land in Survey No.

392 had been sold at the rate of Rs. 37,050/- per hectare and Rs. 43,225/- per hectare respectively. Since these two sale deeds had been

registered within a gap of two days (viz., 5.2.1986 and 7.2.1986 respectively), the Land Acquisition Officer adopted the valuation of Rs. 37,050/-

per hectare, as per the sale deed document No. 238 dated 5.2.1986, considered under Serial No. 206 of the data sale deeds. It is relevant to

note here that the Award of the Land Acquisition Officer was filed as Ex.B-10, the statistics relating to 486 sale deeds prepared by the Land

Acquisition Officer was filed as Ex.B-11 and the sketch of the lands, acquired as well as surrounding, was filed as Ex.B-12.

After adopting the market value of the land at Rs. 37,050/- per hectare, on the basis of the sale deed dated 5.2.1986, on the ground that it

related to the land in Survey No. 392, which was nearer to the acquired land in Survey No. 357/3A1, the Land Acquisition Officer proceeded

further to fix the value of the trees. For the said purpose, the Land Acquisition Officer placed reliance upon the Report of the Assistant Director of

Horticulture, Srivilliputhur, who inspected the land on 20.1.1987 and sent a Report. In his Report, the Assistant Director of Horticulture, fixed the

age of the trees as more than two years. Since in his opinion, the trees were not yet yielding, he fixed the value of all the trees, other than Coconut

trees, at Rs. 29,967.50, which included the value of the Pump Set Well of Rs. 15,000/-. The valuation of the trees, as stated earlier, was done by

the Assistant Director of Horticulture, by estimating the expenditure that the respondent could have incurred in buying the saplings, planting them

and nourishing them for a period of two years. The Land Acquisition Officer found that admittedly the Well was located outside the acquired land

and hence deducted the value of the Well and fixed the value of the trees as Rs. 14,967.50. Then he added the value of the Coconut trees

estimated at Rs. 2,990/-, and fixed the value of all the trees put together at Rs. 17,957.50 {Rs. 14,967.50 + Rs. 2,990/-}.

Thus, in effect, the Land Acquisition Officer estimated the value of the acquired land measuring 0.48.0 hectares at Rs. 17,784/- (at the rate of

Rs. 37,050/- per hectare) and fixed the value of the trees at Rs. 17,957.50. Then he added solatium at 30% to both the above amounts and

allowed interest at 12% per annum from the date of the notification u/s 4(1) {viz., 26.12.1987} to the date of the Award {viz., 26.2.1990}. A

total amount of Rs. 51,100/- was thus arrived at by the Land Acquisition Officer, towards compensation payable to the respondent.

In the reference made u/s 18 of the Act, in LAOP No. 127 of 1992, the landowner examined herself as PW-1 and examined the retired

Director of Horticulture as PW-2 and filed Exx.A-1 to A-6. The Referring Officer examined two witnesses and filed Exx.B-1 to B-12. Placing

heavy reliance upon the evidence of PW-2 and the Report given by him, filed as Ex.A-6, the Tribunal held that the trees were fruit-bearing trees

and that compensation had to be awarded by capitalisation method. Consequently, by a judgment and decree dated 28.4.1993, the Tribunal fixed

a compensation of Rs. 9,20,000/- for Coconut trees, Rs. 8,17,000/- for Silk Cotton trees, Rs. 4,04,000/- for Lemon trees, Rs. 2,00,000/- for

Guava trees, Rs. 65,000/- for Curry leaves trees and Rs. 20,000/- for Pomagranate trees, totalling to a sum of Rs. 24,26,000/-. On this amount,

the Tribunal awarded solatium of 30% and interest at varying rates.

Aggrieved by the judgment and decree of the Tribunal, the Referring Officer filed an appeal in A.S. No. 282 of 1994 on the file of this Court.

The appeal was allowed by this Court by a judgment dated 9.11.1995, on the ground that the evidence of PW-2 and Ex.A-6 were not reliable.

However this Court remitted the matter back to the Tribunal for a fresh consideration, since the parties wanted to adduce additional evidence.

After remand, the landowner examined one more person as PW-3 and filed Exx.A-7 to A-17 as additional documents. Similarly, the Referring

Officer examined PWs.3, 4, 5, 6 and 7 and filed Exx.B-13 to B-53.

Interestingly, while considering the matter afresh after remand, the Tribunal found that among the data lands taken up for scrutiny by the Land

Acquisition Officer (486 sale deeds), there were certain lands which were comparable to the acquired land and that the Land Acquisition Officer

ought not to have rejected them. As stated above, the land acquired was in Survey No. 357/3A1 and the Land Acquisition Officer adopted the

value mentioned in the sale deed relating to the land in Survey No. 392 and arrived at the compensation of Rs. 37,050/- per hectare. The Tribunal

found this to be wrong, on the ground that the acquired land was very near Sathur-Sivakasi Road and that on the Northern side of the acquired

land, there was an Electricity Sub Station. The Tribunal opined that the sale deeds at Serial Nos. 233 and 425 of the data lands (Ex.B-11) related

to lands which were comparable to the acquired lands. These lands were in Survey Nos. 340 and 276. The land in Survey No. 276, situate on the

Eastern side of the acquired land, was valued at Rs. 1,93,751/- per hectare. The land in Survey No. 340 was valued at Rs. 4,19,900/- per

hectare. Therefore, the Tribunal held that the Land Acquisition Officer was in error in not considering these sale deeds which related to the lands

comparable to the acquired land.

The Tribunal also took into account the fact that the landlady herself had sold two small pieces of lands in Survey No. 357 itself (forming the

subject matter of acquisition) under Exx.A-3 and A-4. Both Exx.A-3 and A-4 are sale deeds dated 28.8.1986 executed by the respondent-

landlady. Under Ex.A-3, the respondent sold 5-1/6 cents in Survey No. 357/3 for a value of Rs. 17,500/-. Therefore the rate per hectare would

work out to Rs. 8,36,613/-. Under Ex.A-4, the respondent sold 4-1/2 cents in Survey No. 357/3 for a value of Rs. 15,540/-, making the rate per

hectare work out to Rs. 8,52,973/-. These two sale deeds were considered by the Land Acquisition Officer in his data sheet (Ex.B-11) at Serial

Nos. 321 and 322. But the Land Acquisition Officer discarded these sale deeds on the ground that they were executed by the very same landlady

for very small extents of land.

Interestingly, the Tribunal agreed with the Land Acquisition Officer that the above two sale deeds (Exx.A-3 and A-4) cannot be taken as the

basis, since they were executed by the landlady herself. Therefore, the Tribunal held at the end of paragraph-7 of its judgment that the Land

Acquisition Officer should have valued the acquired land at the rate of Rs. 4,19,900/- per hectare, by taking the sale transaction at Serial No. 233

of the data sheet (Ex.B-11) relating to Survey No. 340.

Having thus concluded in paragraph-7 of its judgment that the value of the land should have been taken as Rs. 4,19,900/- per hectare, the

Tribunal dropped that conclusion without any further discussion, but proceeded to find whether the land was a fruit-garden and how it should be

valued. Therefore, the first question that we have to consider, is whether this approach of the Tribunal, in resorting to the capitalisation method of

evaluation, is correct or not, especially when the Tribunal found that data relating to the sale of comparable lands were very much available.

It appears that the earliest decision that the Supreme Court rendered on the several alternative methods of valuation, was in The Special Land

Acquisition Officer, Bangalore Vs. T. Adinarayan Setty, . It was held in paragraph-9 therein as follows:

It is not disputed that the function of the Court in awarding compensation under the Act is to ascertain the market value of the land at the date of

the notification u/s 4(1) and the methods of valuation may be (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 lands acquired.

The above decision was that of a three Member Bench of the supreme Court and it was followed by another three Member Bench in Smt.

Tribeni Devi and Others Vs. Collector of Ranchi, . However, the Supreme Court also indicated the following in paragraph-4 of its decision in

Tribeni Devi''s case:

These methods, however, do not preclude the Court from taking any other special circumstances into consideration, the requirement being always

to arrive as near as possible an estimate of the market-value. In arriving at a reasonably correct market-value, it may be necessary to take even

two or all of those methods into account inasmuch as the exact valuation is not always possible as no two lands may be the same either in respect

of the situation or the extent or the potentiality nor is it possible in all cases to have reliable material from which that valuation can be accurately

determined.

In The State of Madras Vs. Rev. Brother Joseph, , the Land Acquisition Officer himself adopted the method of capitalising the net income at

20 years'' purchase, for valuing Coconut and Orange Topes. Therefore the Supreme Court approved of the same, without laying down as a

principle of law as to the number of years of purchase at which capitalisation should be made.

Interestingly, in State of West Bengal Vs. Shyamapada and Others, , the Supreme Court directed the application of 20 years'' annual income,

for a land on which sabai grass was grown. However, it is seen from paragraph-4 of the said decision that the Supreme Court decided to apply the

said multiplier only on account of non-availability of sale deeds regarding sales of land on which sabai grass was grown.

In Special Land Acquisition Officer, Davangere Vs. P. Veerabhadarappa and Others, , the Supreme Court dealt with the principles underlying

the method of evaluation and held in paragraph-7 of its decision, as follows:

The function of the Court in awarding compensation under the Act is to ascertain the market value of the land at the date of the notification u/s

4(1) of the Act and the methods of valuation may be: (1) Opinion of experts (2) The prices paid within a reasonable time in bona fide transactions

of purchase or sale of the lands acquired or of the lands adjacent to those acquired and possessing similar advantages. And (3) A number of

years'' purchase of the actual or immediately prospective profits of the lands acquired. Normally, the method of capitalising the actual or

immediately prospective profits or the rent of a number of years'' purchase should not be resorted to if there is evidence of comparable sales or

other evidence for computation of the market value. It can be resorted to only when no other method is available.

Emphasising the principle that the method of capitalisation should be adopted only when evidence of comparable sales is not available, it was held

in paragraphs-8 and 9 of the same decision as follows:

Where definite material is not forthcoming either in the shape of sales of similar lands in the neighbourhood at or about the date of notification u/s

4(1) or otherwise, the Court has no other alternative but to fall back on the method of valuation by capitalisation. In valuing land or an interest in

land for purposes of land acquisition proceedings, the rule as to number of years'' purchase is not a theoretical or legal rule but depends upon

economic factors such as the prevailing rate of interest in money investments. The return which an investor will expect from an investment will

depend upon the characteristic of income as compared to that of idle security. The main features are: (1) Security of the income; (2) fluctuation; (3)

chances of increase; (4) cost of collection etc. The most difficult and yet the most important and crucial part of the whole exercise is the

determination of the reasonable rate of return in respect of investment in various types of properties. Once this rate of return and accordingly the

rate of capitalisation are determined, there is no problem in valuation of the property.

It is thus clear from the above enunciation that the method of determining the value of the property by application of a multiplier to the net annual

income or profit should only be adopted when there is no evidence of comparable sales of similar lands in or about the neighbourhood at the

relevant time i.e., on the date of the notification u/s 4(1) of the Act. In certain circumstances however the Court has no other alternative but to fall

back on the capitalised value.

After laying down the law as aforesaid, the Supreme Court approved in the above case, a multiplier not exceeding 10 as appropriate.

However, since the Government itself took a stand in that case that the multiplier of 12-1/2 would be appropriate, the Supreme Court allowed a

multiplier of 12-1/2. This can be seen from paragraph-21 of the above decision which reads as follows:

In the premises, when the rate of return on investment was 8.25% in the years 1971 and 1972, a person investing his capital in agricultural

lands would ordinarily expect 2% to 3% more than what he could obtain from gilt-edged securities or other forms of safe investment and therefore

the proper multiplier to be applied for the purpose of capitalisation could not in any event exceed ""ten"". In the present case, the State Government

however contends that the proper multiple to be applied should be 12-1/2 in computation of the capitalised value of the lands in these cases having

regard to the rate of return of 8% at the relevant time i.e., on the date of the notification u/s 4(1) of the Act. In view of this, it must be held that the

multiple of 12-1/2 should be applied in computation of the capitalised value of the lands.

The dicta laid down in P. Veerabhadarappa''s case, was quoted with approval in Koyappathodi M. Ayisha Umma Vs. State of Kerala, .

However, the Supreme Court also added therein that it is open to the Court to take into account some special circumstances in an appropriate

case. It was held in paragraph-4 as follows:

It is settled law that the methods of valuation to be adopted in ascertaining the market value of the land as on the date of the notification are: (i)

opinion of experts (ii) the price paid within a reasonable time in bona fide transaction of the purchase or sale of the lands acquired or the lands

adjacent to the lands acquired and possessing similar advantages and (iii) a number of years purchase of the actual or immediately prospective

profits of the lands acquired. These methods, however, do not preclude the Court from taking any other special circumstances obtained in an

appropriate case into consideration. As the object being always to arrive as near as possible in an estimate of the market value in arriving at a

reasonable correct market value, it may be necessary to take even two or all those matters into account inasmuch as the exact valuation is not

always possible as no two lands may be the same either in respect of the situation or the extent or the potentiality nor is it possible in all cases to

have reliable material from which that valuation can be accurately determined.

After referring to P. Veerabhadarappa''s case, the Supreme Court further held in the same paragraph, as follows:

In Special Land Acquisition Officer, Davangere Vs. P. Veerabhadarappa and Others, , this Court held that the method of valuation by

capitalisation should not be resorted to when other methods are available. However, where definite material is not forthcoming either in the shape

of sales of similar lands in the neighbourhood at or about the date of notification u/s 4(1) or otherwise, the Court has no other alternative but to fall

back on the method of valuation by capitalisation. In valuing land or an interest in land for purposes of land acquisition proceedings, the rule as to

number of years'' purchase is not a theoretical or legal rule but depends upon economic factors such as the prevailing rate of interest in money

investments. The return which an investor will expect from an investment will depend upon the characteristic of income as compared to that of idle

security. The main features are: (1) security of the income; (2) fluctuation; (3) chances of increases; (4) cost of collection, etc. The traditional view

of capitalised value being linked with gilt-edged securities, no longer be rigorous when investment in fixed deposits with nationalised banks,

National Savings Certificates, Unit Trusts and other forms of Government securities and even in the share market command a much greater return

are available. The capital in agricultural lands normally when the rate of return on investment was 8.25 per cent in the years 1971-1972, the proper

multiplier to be applied for the purpose of capitalisation would not, in any event, exceeding 10 per cent.

In Addl. Special Land Acquisition Officer Vs. Yamanappa Basalingappa Chalwadi, , the Supreme Court followed the ratio in P.

Veerabhadarappa''s case, but applied 10 years multiplier, since data of sale of comparable lands was not available.

In K.A.A. Raja and Others Vs. State of Kerala and Another, , the Supreme Court held that it would be necessary in every case to place a

correct report before the Reference Court about the number of trees, their age, their yield etc., when capitalisation method is adopted. Ultimately,

the Supreme Court took 7 years'' multiplier in that case, for want of appropriate evidence.

In State of Haryana Vs. Gurcharan Singh and another etc., , a compensation for the land was awarded on the market value. Additionally

compensation for fruit-bearing trees was also awarded separately. The Supreme Court held that the compensation for the land as well as fruit-

bearing trees, cannot be determined separately. Coming to the multiplier to be adopted, the Supreme Court held in paragraph-3 of the said

decision as follows:

Under no circumstances, the multiplier should be more than a 8 years'' multiplier, as it is a settled law of this Court in a catena of decisions that

when the market value is determined on the basis of the yield from the trees or a plantation, 8 years'' multiplier should be the appropriate multiplier.

For agricultural land 12 years'' multiplier should be a suitable multiplier.

In Collector, Land Acquisition Vs. Ganaram Dhoba, , the Supreme Court held the application of a multiplier of 16 to be illegal. In paragraph-

4, it was held that ""it is settled law that multiplier of 10 would be the proper multiplier to determine the compensation when the land is assessed on

the basis of the yield on agricultural lands"".

Again in Special Land Acquisition Officer Vs. Virupax Shankar Nadagouda, , the Supreme Court found fault with the application of the

multiplier of 15 and held that 10 years'' multiplier would be the proper method. While holding so, the Supreme Court specifically followed the

decision in P. Veerabhadarappa''s case.

In State of Gujarat and others Vs. Rama Rana and others, , the Supreme Court again reiterated in paragraph-5, the principle of law

propounded in P. Veerabhadarappa''s case. It was held in paragraph-5 as follows:

It is undoubtedly true that one of the methods of determination of compensation, in the absence of best evidence, namely, sale deeds, is the

realised value of the crop.

After holding so, the Supreme Court allowed a multiplier of 10 and directed a deduction of 50% towards cultivation expenses, since the Court

found that both parties failed to produce the best evidence, namely, the sale deeds.

In Thakarsibhai Devjibhai and Others Vs. Executive Engineer, Gujarat and Another, , the Supreme Court approved that part of the judgment

of the High Court which followed the decision in P. Veerabhadarappa''s case. In paragraph-9, the Supreme Court held as follows:

The High Court for this relied on Special Land Acquisition Officer v. P. Veerabhadarappa, to hold that yield method can be referred only when

there is no other evidence in the form of sale transaction or opinion of experts available.

However, on a different ground the order of the High Court was found fault with.

In Krishi Utpadan Mandi Samiti v. Malik Sartaj Wali Khan and Ors., 2001 (10) SCC 660 , the Supreme Court referred to the decisions in

Virupax Shankar Nadagouda, Rama Rana and Koyappathodi M. Ayisha Umma cases and ultimately held that the multiplier of 10 years would be

appropriate for fixing the value of the land.

In Airports Authority of India Vs. Satyagopal Roy and Others, , the Supreme Court quoted with approval the decision in P.

Veerabhadarappa''s case and held in paragraph-8 as follows:

It is settled law that in evaluating the market value of the acquired property namely land and building or the land with fruit-bearing trees standing

thereon, value of both is to be determined not as separate units but as one unit. Therefore, it would be open to the Land Acquisition Officer or the

Court, either to assess the land with all its advantages and fix the market value thereof on the basis of comparable sale instances. In case where

comparable sale instances are not available and where there is reliable and acceptable evidence on record of the annual income, market value

could be assessed and determined on the basis of net annual income multiplied by appropriate multiplier for its capitalisation. In the case of fruit-

bearing trees, their net yield is to be taken into consideration, that is to say, by deducting expenses incurred for getting the yield and also the value

of the timber and expenses to cut and remove the trees from the land. For capitalising the income, previously income from the gilt-edged securities

was the basis, but thereafter rate of interest in the Nationalized Banks where deposits are quite safe is taken into consideration as the proper basis.

In Airports Authority of India''s case, the Supreme Court also referred to the decision in Shanti Devi''s case and Gurcharan Singh''s case and

ultimately held that the High Court was error in not applying 8 years multiplier following Gurcharan Singh''s case. The adoption of the multiplier of

18 by the High Court was held by the Supreme Court (in paragraph-14) to be clearly erroneous. However, considering the small amount of

compensation, the Supreme Court did not ultimately interfere in the matter, applying dicta in State of Madras v. Rev. Brother Joseph.

In Assistant Commissioner-cum-Land Acquisition Officer, Bellary Vs. Sri S.T. Pompanna Setty, , the Supreme Court held in paragraph-15

that normally where compensation is awarded on yield basis, multiplier of 10 is considered proper and appropriate.

In Land Acquisition Officer, A.P. Vs. Kamadana Ramakrishna Rao and Another, , the Supreme Court referred to the decisions in P.

Veerabhadarappa''s case, V.S. Nada Gouda''s case and Pompanna Setty''s case and held that the application of multiplier of 20 was contrary to

the well settled proposition of law.

Thus the law laid down in Special Land Acquisition Officer, Davangere Vs. P. Veerabhadarappa and Others, has held the field for the past 25

years and has been cited with approval in all decisions upto Land Acquisition Officer, A.P. Vs. Kamadana Ramakrishna Rao and Another, .

Therefore the capitalisation method of valuation of the acquired land is permissible only in the absence of evidence of comparable sales or in the

absence of other evidence for computation of market value.

Despite the above well settled proposition of law, the Tribunal adopted the capitalisation method, in the case on hand, even after recording in

paragraph-7 of its judgment that there is evidence of comparable sales available on record. In the last line of paragraph-7 of its judgment, the

Tribunal held very clearly that the sale of the land in Survey No. 340 mentioned at Serial No. 233 of the data sheet Ex.B-11, is a comparable sale

and the sale value indicated in that document could be taken as the guiding factor. After recording this finding, there was no scope for the Tribunal,

in view of the law laid down by the Supreme Court to adopt the capitalisation method. Hence the approach of the Tribunal in our considered view,

is clearly erroneous.

Even if for the sake of argument, the sale deed at Serial No. 233 of the data sheet (Ex.B-11) relating to Survey No. 340 is discarded, the

landlady herself had produced two sale deeds as Exx.A-3 and A-4. These sale deeds relate to the sale of 5-1/6 cents and 4-1/2 cents respectively

in the very same Survey Number viz., 357/3. The acquired land is also in Survey No. 357/3. Both these sale deeds Exx.A-3 and A-4 were

executed by the respondent herself in favour of third parties, for a consideration of Rs. 17,500/- and Rs. 15,540/- respectively. On the basis of this

value, the value per hectare works out to Rs. 8,36,613/- under Ex.A-3 and Rs. 8,52,973/- under Ex.A-4. Since the land acquired is less than half

a hectare viz., 0.48.0 hectares, the market value of the land acquired, would only be a little above Rs. 4,00,000/-.

Interestingly, the sale of small pieces of land under Exx.A-3 and A-4 by the respondent-landlady in the very same Survey Number, had taken

place on 28.8.1986, just around the time when the officials of the Electricity Board started surveying the land with a proposal for its acquisition for

the expansion of the Sub Station. In fact, the earliest letter seeking the consent of the respondent for the acquisition, was filed as Ex.B-48. It is

dated 9.9.1986. The letter of consent given by the respondent-landlady, agreeing for the acquisition of the land in question, is filed as Ex.B-30. It is

seen from Ex.B-30 that it was given by the respondent, in reply to the letter of the Divisional Engineer, Electricity Board, dated 18.11.1986. It is

only after this consent letter Ex.B-30, that the Superintending Engineer of the Electricity Board writes a letter dated 8.12.1986 filed as Ex.B-29, to

the District Revenue Officer, requesting him to initiate the process of acquisition.

Therefore, the above circumstances indicate that the sale of small extents of land by the respondent in the very same Survey Number under

Exx.A-3 and A-4 dated 28.8.1986, might have happened, perhaps, when the proposal for acquisition was in the offing. Even according to the

respondent, as seen from her deposition as PW-1, the total extent of land in Survey No. 357/3 was 4 acres, out of which the land acquired was of

the extent of acres 1.19. Therefore, the quality of soil in the small pieces sold under Exx.A-3 and A-4, in the very same Survey Number, could not

have been different from the quality of soil in the acquired land. Hence it is clear that the respondent-landlady herself had estimated the market

value of the land in Survey No. 357/3 only at about Rs. 8,36,613/- per hectare. In such circumstances, the adoption of the capitalisation method of

valuation, by the Tribunal, is wholly unjustified.

Apart from adopting the capitalisation method, the Tribunal also committed another error viz., that of placing reliance upon the evidence of

PW-2 and his Report Ex.A-6. Even in the first round in A.S. No. 282 of 1994, this Court rejected the evidence of PW-2 and his Report Ex.A-6

and remanded the matter back to the Tribunal, giving liberty to the parties to lead additional evidence. In paragraph-3 of its judgment, dated

9.11.1995, passed in A.S. No. 282 of 1994, the Division Bench commented as follows:

A perusal of his deposition along with the report Ex.A-6 shows that the witness is not speaking the truth and he has prepared the report only to

help the claimant to claim high compensation.

Despite the above finding of the Division Bench of this Court, the Tribunal again relied upon the evidence of PW-2 and his Report Ex.A-6, on a

strange reasoning that after remand, he was recalled and re-examined.

PW-2 claimed in his evidence that he first inspected the land in January 1980 and advised the landlady to resort to high density farming. He

further claimed that he visited the Farm five time thereafter, the last time being on 6.6.1987. He admitted that he served the State Government as

the Director of Horticulture from 1983 till the date of his retirement in April 1987. His admission shows that during the period from 1980 to 1987,

he was a Government Servant, but he did not seek the permission of the Government either to tender advise to a private party or to submit a

Report in their favour, especially in respect of a land acquisition case. Therefore, his evidence is unacceptable, without going into the question

whether his conduct was deplorable or not.

We have one more reason to discredit the evidence of PW-2. According to him, the respondent developed the land into a farm land and

planted saplings in the year 1981, on his advise. But in the consent letter, filed as Ex.B-30, the landlady had claimed that she had planted about

415 trees of different varieties, in the year 1983. This consent letter Ex.B-30, was sent by the respondent in response to the letter of the Divisional

Engineer dated 18.11.1986. In the second paragraph of Ex.B-30, the respondent-landlady claimed as follows:

In the required area by you, I had planted in the year 1983, the following varieties of fruit trees in near about 1.18 acres.

The above statement in Ex.B-30 was the one made at the earliest point of time by the respondent-landlady. Therefore, the credibility of that

statement is much more than that of the statements made subsequently, apart from the fact that the probability of the same is also much more. The

above statement of the landlady in Ex.B-30 that the saplings were planted in 1983, also almost tallies with the age of the trees given in the

Inspection Report of the Assistant Director of Horticulture, dated 2.2.1987, filed as Ex.B-9.

In the first round, the author of Ex.B-9, viz., the Assistant Director of Horticulture, was not examined as a witness. The Division Bench held in

A.S. No. 282 of 1994 that no reliance can be placed on Ex.B-9 unless further evidence is adduced regarding its contents. Therefore, after

remand, the Assistant Director of Horticulture was examined as RW-5 and he confirmed the inspection made by him on 20.1.1987 and the Report

given by him on 2.2.1987. He had stated in Ex.B-9 Report that there were 65 Coconut trees, 85 Guava trees, 135 Lemon trees, 85 Silk Cotton

trees, 25 Curry leaves trees and 10 Pomagranate trees, totalling to 405 trees and that they were more than 2 years old. His evidence and Report

were challenged by the respondent only on the ground that he inspected the property without notice to the landlady. But, in our considered view,

such a challenge is a very weak challenge and it does not appeal to us, for more than one reason.

The Report Ex.B-9, dated 2.2.1987, was submitted at least 7 months before the landlady handed over possession. The parties were not in

dispute at the time of the inspection on 20.1.1987 and at the time of the Report, dated 2.2.1987. On the contrary, the parties were on consensus

ad idem, at that time, since the consent letter of the respondent was given in November/December 1986 and the inspection by RW-5 (Assistant

Director of Horticulture) was done in January 1987. Moreover, the contents of Ex.B-9 Report, with regard to the total number of trees and the

nature of the trees, is almost accepted by the respondent except to the extent of 10 trees. The only dispute that the respondent has about Ex.B-9

Report is with regard to the age of the trees mentioned therein as just more than 2 years. But the respondent herself had claimed in her letter Ex.B-

30 (extracted earlier) that the trees were planted in the year 1983. Therefore, the contents of Ex.B-9 Report, read with the oral testimony of RW-

5 appear to be unassailable.

The evidence of RW-5 and his Report Ex.B-9, in our considered view, appear to be well balanced and not one sided, for the following

reasons:

(a) The number of each category of trees is correctly mentioned (except in respect of Silk Cotton trees).

(b) The Report records the fact that the landlady had put up a bore well and was irrigating the trees with 1 HP Jet Motor Pump, through rubber

tubes.

(c) The Report also records the fact that the farm is well maintained, though due to severe draught, for 2 years, the plants had not grown as

anticipated.

(d) The Report records that the soil has lime content and was suited for cultivating lemon.

(e) The Report further records that because of being a farm, the value of the land should be more.

(f) It is also recorded in the Report that the plants may start yielding after 3 years and that the Guava plants have reached the stage of flowering.

(g) As per the Report, Lemon was the primary cultivation and all other plants were inter-crops.

(h) The Report concludes that once Lemon and other plants start yielding, the farm would become a fully developed one and the value of the land

would then increase manifold.

In the light of the above findings in Ex.B-9, it is highly uncharitable on the part of the respondent, to attribute any motives to RW-5 and his

Report Ex.B-9. We are more than convinced that Ex.B-9 reflects the true state of affairs of the land acquired, since (i) most of its contents (such

as number of trees, variety of trees etc.) are accepted by the respondent and (ii) the dispute raised by the respondent with regard to the age of the

trees, fails in the light of the admission in Ex.B-30.

Apart from the fact that as per Ex.B-30, the saplings were planted only in 1983, the claim of the respondent that the trees had started yielding

and that she was deriving a huge income, is belied by several other factors also. The claim of the respondent was that she was deriving an income

of about Rs. 5,00,000/- per annum. But she admitted that she was not assessed to agricultural income tax. This was also confirmed by RW-3. By

a letter dated 30.11.1993, filed as Ex.B-40, the Assistant Collector, Sivakasi, called for information from the Agricultural Income Tax Officer. He

sent a reply on the same day, filed as Ex.B-41 to the effect that as per the General Index Registers of Sathur Taluk, for the period from 1984-85

to 1991-92, the respondent was not assessed to agricultural income tax. The concerned Register relating to payment of agricultural income tax, for

the fasli years 1391 to 1402 was also filed as Ex.B-28. We are not for a moment, carried away by the non payment of agricultural income tax by

the respondent, to reach the conclusion that the trees in the acquired land were not fruit-bearing and had not started yielding. We are only taking

note of the non payment of agricultural income tax as a corroborative or additional factor, in support of the conclusion that we have reached in the

previous paragraphs.

In the light of the above discussion, we hold that the capitalisation method of valuation adopted by the Tribunal, is wholly illegal and

unsustainable, especially in view of--(i) the clear evidence as well as admission available on record with regard to comparable sales and (ii) the

unimpeachable evidence to the effect that the trees were not fruit-bearing and had not started yielding.

Now coming to the compensation to be fixed, on the basis of the evidence of comparable sales, it is seen that Exx.A-3 and A-4 relate to the

sale of small extents of land in the very same Survey Number, which is the subject matter of the acquisition. The sale of land in Survey No. 340

appearing at Serial No. 233 in the data sheet (Ex.B-11), which is accepted by the Tribunal to be capable of a close comparison, is nevertheless

situate at a distance. Though the value indicated in Exx.A-3 and A-4 are not accepted both by the Land Acquisition Officer and by the Tribunal,

on the sole ground that those sale deeds were by the respondent herself, we are of the considered view that the same can be accepted. This is in

view of the fact that these sale deeds are dated 28.8.1986. The first letter seeking the consent of the landlady was sent only on 9.9.1986 under

Ex.B-48. Though an element of suspicion is created, it is not established categorically by the appellants that Exx.A-3 and A-4 were created by the

landlady for the purpose of jacking up the value of the property, in anticipation of acquisition. Moreover, the sale of the land in Survey No. 340

which is adopted by the Tribunal as an indicator, is actually situate at a distance of just less than a kilometer from the acquired land. In Ex.B-12

sketch, the Land Acquisition Officer has shown the lands lying within a radius of 1 kilometer from the acquired land. Survey No. 340 is towards

the end of the radius. Therefore, we reject the comparison between the land in Survey No. 340 and the acquired land and we accept Exx.A-3 and

A-4.

In accepting the value indicated in Exx.A-3 and A-4, there is an inherent advantage viz., that the respondent can be pinned down by her own

valuation of the land in the very same Survey Number. Therefore we take the market value of the land, as reflected in Ex.A-3, as the basis. In

Ex.A-3, 5-1/6 cents have been sold at Rs. 17,500/-. Hence the rate per cent is about Rs. 3,387/-. The land acquired is of the extent of acres

1.19. Therefore the market value for the entire extent of the land acquired would come to Rs. 4,03,064/-.

In so far as the trees are concerned, we accept the valuation given by the Assistant Director of Horticulture under Ex.B-9. In other words, we

allow an amount of Rs. 14,967.50 for other trees and an amount of Rs. 2,990/- for Coconut trees, totalling to Rs. 17,957.50. We round it off to

Rs. 18,000/-.

Thus the total amount of compensation payable to the respondent would be as follows:

Rs.

Value of the land - 4,03,064.00

Value of the trees - 18,000.00

-----------

Total - 4,21,064.00

==========

Coming to the question of interest, it is an admitted fact that possession of the land was taken over by consent even before the notification u/s

4(1). However, u/s 23(1-A) of the Land Acquisition Act, 1894, interest is payable at 12% per annum from the date of the notification till the date

of the Award or till the date of taking possession, whichever is earlier. If the provision is literally construed, the respondent may not get any interest

from the date of possession till the date of the Award. However, u/s 17(2), the appellants ought to have offered to the respondent, compensation

for the trees standing on the land, at the time of taking possession. Under Sub Section (3-A) of Section 17, the Collector is obliged to tender

payment of 80% of the compensation, before taking possession. If the Collector was prevented from making such payment, he should deposit the

same into Court, as provided u/s 31(2). But admittedly, the appellants in this case did not make any payment at the time of taking over possession,

as per Section 17(2) or 17(3-A). Therefore the appellants are obliged to pay interest as per Section 34 at the rate of 9% per annum from the date

of possession till the date of expiry of one year. Since the compensation is enhanced, the appellants should also pay interest on the excess amount

at 9% per annum u/s 28 from the date of possession. Thus, in effect, the respondent would be entitled to interest uniformly at the rate of 9% per

annum from the date of possession till the date of deposit already made into Court, on the entire amount of compensation as fixed now in this

appeal.

Accordingly we allow the appeal and modify the judgment of the Tribunal in LAOP No. 127 of 1992 dated 13.1.1999 by fixing the amount of

compensation payable to the respondent as Rs. 4,21,064/-. The respondent will be entitled to solatium at 30% on the said amount and interest at

the rate of 9% from 28.9.1987 (the date of possession) till the date on which the appellants deposited the money in pursuance of the interim orders

passed in A.S. No. 282 of 1994.

It is seen from the records that during the pendency of the appeal in the first round in A.S. No. 282 of 1994, the appellants were directed to

deposit a portion of the Award and the respondent was permitted to withdraw 25% of the same, after furnishing a Bank Guarantee. The

respondent accordingly withdrew a total amount of Rs. 19,61,230/-, after furnishing the Bank Guarantee. In its judgment dated 9.11.1995 in A.S.

No. 282 of 1994, the Division Bench ordered Bank Guarantee to continue till the disposal of the LAOP after remand. After the Tribunal passed a

fresh judgment, the Bank Guarantee expired. The application filed by the appellants for a direction to the respondent to renew the Bank

Guarantee, did not see the light of the day. However, the respondent has filed an affidavit of undertaking, agreeing and undertaking not to alienate

her some other properties. The respondent has also filed a Valuation Report. Therefore the property covered by the affidavit of undertaking should

not and could not have been sold by the respondent so far. The respondent should refund the excess amount already withdrawn by her, after

adjusting the amount due to her as per this judgment. The respondent is granted two months time to deposit into the Sub Court, Srivilliputhur, to

the credit of LAOP No. 127 of 1992, the excess amount together with simple interest at 6% per annum, from the date of withdrawal of the money

till the date of deposit into Court. Till the money is deposited by the respondent, there shall be a charge on the other properties of the respondent.

If excess amount is not deposited, it will be open to the appellants to invoke the power conferred by Section 17(3-B).

In the result, the appeal is allowed to the following effect:

(a) The judgment and decree of the Sub Court, Srivilliputhur, dated 13.1.1999 in LAOP No. 127 of 1992 is modified and the compensation

payable to the respondent is fixed at a total amount of Rs. 4,21,064/-, together with solatium of 30% and interest at the rate of 9% from

28.9.1987 till the date of deposit made by the appellants in A.S. No. 282 of 1994.

(b) The appellants shall be entitled to proportionate costs in this appeal.

(c) The respondent shall make a deposit of the excess amount now lying with her, together with simple interest at the rate of 6% per annum from

the date of her withdrawal of the money till the date of her redepositing the same, within two months, to the credit of LAOP No. 127 of 1992 on

the file of the Sub Court, Srivilliputhur and upon such deposit, the appellants are permitted to withdraw the same.

(d) Till the respondent deposits the excess amount before the Sub Court, the affidavit of undertaking filed by the respondent shall remain in force

and there shall be a charge on the other properties of the respondent, for the amount due from her.

The appeal is allowed on the above terms. Consequently connected miscellaneous petitions are closed.