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Judgment
Srinivasan, J.—In all these appeals, two types of lands are involved, namely, irrigated dry lands and manavari dry lands. The Land
Acquisition Officer classified the lands in three groups, namely, irrigated dry lands, manavari dry lands and dry lands with paddy cultivation. He
awarded Rs. 5,000/- per acre for irrigated dry lands, Rs. 3,200/- per acre for manavari dry lands and Rs. 3,500/- for dry lands with paddy
cultivation. Notification under S. 4(1) of the Land Acquisition Act (hereinafter referred to as ''the Act'') was issued on 14.8.1978 and possession
was taken by the Government on 25.2.1980. On a reference under S. 18 of the Act, the Subordinate Judge, Cuddalore, has fixed the
compensation for irrigated dry lands at Rs. 40,000/- and manavari dry lands at Rs. 30,000/- per acre. He awarded Rs. 1,500/- for two wells
situate in the lands. He has not fixed any amount for dry lands with paddy cultivation as in his opinion there cannot be such a classification. The
main contention urged on behalf of the appellants as well as the second respondent who has been now impleaded, namely, Neyveli Lignite
Corporation (hereinafter referred to as ""Corporation"") is that the Subordinate Judge is in error in adopting capitalisation method, when Sale deeds
of comparable lands are available. According to them, learned Judge ought to have compared the said sale deeds and fixed the value of the lands
on that basis only and should not have resorted 1296 to capitalisation method. Our attention is drawn to the judgment of the same learned
Subordinate Judge in LAOP. No. 178 of 1983 rendered on 1.5.1.1986 in which he had compared other sale deeds and fixed the value of the
lands. It is also argued that the claimants claimed only Rs. 10,000/- per acre in the application for reference. This argument is not sustainable as the
claimants made it clear that at least a minimum of Rs. 10,000/- per acre should have been awarded. The third argument advanced on behalf the
appellants and the second respondent is that the learned Subordinate Judge is in error in taking note of the potential value of the lands on the basis
that the second respondent Corporation is exploiting minerals, namely lignite and making huge profits and compensation has to be awarded only on
the basis of the value of the lands, but not on the basis of the profits that would be made by the Corporation.
We have been taken through the evidence on record. Learned counsel for the appellant and the Corporation submitted that there is no denial of
the averments made in the claim statements filed by the claimants before Court. In the claim statements, it is categorically stated that the
Government of Madras, issued a press-note in 1948 announcing that the Government proposed to undertake legislation reserving power to
compel any person who had purchased land on or after a date to be prescribed in 1947 in the lignite bearing areas to sell such lands to the
Government at the rate at which it was purchased. The Government also advised the owners of the lignite bearing lands in the Vridhachalam and
Cuddalore taluks not to sell their lands to speculators. This was also followed up by Madras Act XXI of 1953. Subsequently, this Court and the
Supreme Court declared that the awards passed on the basis of Act XXI of 1953 could not be sustained. This legislation was introduced just to
scare the prospective buyers of the land. The object was to effectively prevent the rise in prices in agricultural lands in the said areas. That object
was achieved by the State. This specific averment in the claim statement has not been controverted by the Government in its statements filed in the
original petitions. There is not even a reference to the said averments in the statements. There is considerable force in the argument advanced by
the claimants that people in the area did not want to sell their lands in view of the impending proposal to acquire they lands. However, legally and
technically, the were not prevented from selling their lands by virtue of any Act or notification of the Government. But, practically, a fear was
undoubtedly created in the people and they could not sell their lands, as such sales would not fetch proper price. Anybody who would come
would only ask for minimum price as there is always a threat by the Government to acquire the same. Thus, it is the case of the claimants that any
sale effected during the relevant period was only on account of emergent situations in the families of the concerned owners and therefore, the value
in the sale deeds cannot be taken as criteria for fixing the value of the acquired lands. In the circumstances of these cases, we accept this
contention.
It is contended by learned counsel that on an earlier occasion, a Division Bench of this Court had rejected such an argument in A.S. Nos. 153,
161, 181, 188 and 191 of 1985 in their judgment dated 10.6.1991. The Division Bench observed that there was no evidence in the cases to say
that the sale deeds did not reflect the real value of the lands. But, in the present cases, there are ample materials on record to prove the same.
Hence, the decision of the Bench cannot be used as a rule in these cases.
Learned counsel for the Corporation has filed before us a tabular statement relating to the sales effected in and around the village during the
relevant time, namely, 1978-79. Particulars of ten sale deeds are found in the said statement. We find that most of the lands dealt with in the sale
deeds are situate far away from the acquired lands. It is evident from the survey numbers given in the tabular statement. Some other lands are part
of the acquired lands. Most of the sale deeds deal with very small extents and they cannot be effectively taken for comparison when large extents
of lands were acquired. As pointed out earlier, the sale deeds cannot reflect the true value of the lands.
It is then contended by the counsel for the Corporation that an opportunity should be given to the Corporation to adduce evidence and the
matter should be sent back to the Subordinate Judge. There is no merit in this contention. The Corporation had ample opportunity to adduce
evidence before the Subordinate Judge. Under the provisions of S. 50 (2)of the Act, the Corporation being the requisitioning body could well have
adduced evidence in these proceedings. Apart from that, as a matter of fact, it is seen that the Corporation was well aware of the proceedings and
some of the officials of the Corporation have given evidence in these proceedings. They have been assisting the Government Pleader and they
could have produced all the documents, which they wanted through the Government Pleader.
Further, in seven of these appeals, namely, A.S. Nos. 97, 102, 138 and 156 to 158 the Corporation was impleaded as the second respondent
even in 1986. No doubt, that order impleading the Corporation was challenged in appeal and set aside by the Full Bench of this Court. Later, the
Supreme Court set aside the order of the Full Bench. The Judgment of the Supreme Court was on 19.10.94. and the Corporation had ample time
thereafter to gather relevant evidence. The Corporation could have at least filed an affidavit before us with regard in the particular of the evidence.
Moreover, when these matters were posted before us on 19.11.1994 we fixed the date of hearing as 13.2.1995. Thus, we gave more than two
months Yet, the Corporation did not file any affidavit before us to show what kind of evidence is available with them to be brought before court It
is needless to point out that if the Corporation is allowed to adduce oral evidence after such a long time, it will only be opening the flood gates of
perjury. Any record that is available in the form of evidence could have been and should have been brought before us now so that we could have
considered whether these records arc genuine and can be used in evidence. We have gone through the tabular statement of 10 sale deeds and as
pointed out above, they arc not relevant for deciding the value of the lands in these cases.
The contention of the claimants is that the evidence as regards income from the lands has been proved by the claimants. It is stated that such
evidence is not challenged by cross examination or contradicted by other evidence by the Government or the Corporation. As per the evidence,
the lands will yield 20 bags of paddy per acre per year, 20 bages of ground-nut per acre per year and gingelly. But, the claimants are prepared to
give up the income from gingelly According to the claimants, the paddy was being sold at Rs. 75/- per bag and ground-nut at Rs. 100/- per bag.
Thus, the total income from the lands was Rs. 3,500/- per acre per year. One-third thereof has to be deducted for expenses and the balance
comes to Rs. 2,300/- per acre per year The claimants contended that the multiplier of 20 should be adopted for fixing the value by capitalisation
method. Thus, according to the claimants, the value of the lands will be Rs. 46,000/-. It is also contended that potential value of the lands should
be added thereto. It is stated that the lands are all coal bearing lands and the value of minerals should be taken into account before the market
value is arrived at Reliance is placed on the decisions in K. Raghunatha Rao v. The Secretary of Staff for India (39 (1920) MLJ. 623), Mt.
Chabiran Bibi Vs. The State of West Bengal and Others, , and Additional Special L.A. Officer, Mangalore v. K. T. Alva (AIR 1976 Karnataka
99). None of these decisions will help the claimants in the present cases. No doubt, the lands are coal bearing lands. But, the claimants could not
have utilised the lands for that purpose not could have dug out lignite and marketed the same. The question has been considered in detail by a
Division Bench of this Court in a batch of cases, which arose from the same series of acquisition, in Appeal Nos. 595 to 604 of 1985 dated
10.6.1991 (Special Tahsildar No. X and Land Acquisition (L.P)., Neyveli v. Govinda Padayachi) The relevant part of the Judgment reads thus:
In regard to the award of compensation by the Court below towards potential value, we find that it has proceeded upon what had been considered
by it to be the special adaptability of the acquired lands for the purpose of exploitation of coal and clay lying underneath. We may immediately
point out that in para 22 of the judgment, the Court bellow has stated that the presence of minerals would enhance the value of the land. Having
stated so, the court below had also found that the owners of the lands acquired are not using the minerals and they cannot also use the minerals and
it is not possible for them to use the minerals. It has also been further stated that there is absolutely no evidence whatever to show that the owners
had used the land for exploiting either lignite or clay. Having stated this, the Court below has proceeded to held that Neyveli Lignite Corporation,
for whose benefit the lands had been acquired, is likely to profit by several crores and that the persons, from whom, the lands had been acquired,
have all been displaced and the potential value has also to be taken into account and all that would justify the fixing of compensation in respect of
the cashew thopes at Rs. 85,000/- per acre. We arc unable to agree with the reasoning of the Court below. We find that under the Madras Lignite
(Acquisition of Land) Act, 1953 (Act 11 of 1953), the State Government had made it very clear that it will be entitled to acquire any land in the
areas to which that Act extended, for the purpose of exploiting and utilising the mineral in such land. The operation of the Act had been extended
to the villages in South Arcot District specified in the schedule and Periiakurichi village is shown as item 7 in the first schedule to that Act. This Act
has come into force on 16.6.1953. Statutorily, therefore, the State had made it known that the lands in this village are liable to be acquired. In
other words, there was always a threat of acquisition. That perhaps is also one of the reasons that there is no instance of sales of cashew thops in
that village. As pointed out by the Court below, it is not the case of the respondents that they have made any attempt towards exploiting the
minerals. It is in this connection, attention has to be drawn to the provisions of the Land Acquisition (Mines) Act, (Act 18 of 1995). u/s 2of that
Act, it has been provided that except as expressly provided by that Act nothing in that Act, shall affect the right of the Government to any mines or
minerals. We may also point out that the coal bearing areas have been subject to a special legislation like the Coal Bearing Areas (Acquisition and
Development) Act, 1973, Cooking Coal (Nationalisation Act, 1972, etc. Under the Mines and Minerals Act, 1957, with reference to coal falling
under item 4 of the First Schedule and Clay falling under item 11 under second schedule, provision has been made under Sections 4, 5(2) (a), 7(2)
and 8(2) and section 9of the Act. The gist of these provisions is to the effect that no person shall undertake mining operations, except under and in
accordance with the terms and conditions of a mining lease granted and for the granting of a mining lease with the previous approval of the Central
Government. The other provisions regulate the issue of mining lease either for coal or for other minerals detailed in the schedule. We thus find that
the type of mineral, that is found underneath in this case, is such that the owner of the land cannot by himself without more, exploit the resources,
but that can be done subject to the licence granted by the Government. For all that, the owners of the acquired lands might not have succeeded in
securing a licence, especially because the mineral happens to be coal, the industry relating to which, has been almost totally nationalised and in that
context, it can be taken that coal mining would have been an impossible so for as the owners of the acquired lands are concerned. We are award
that all reliable possibilities should enter into consideration while determining the quantum of compensation awardable. But, even according to the
court below, as stated earlier, exploitation is impossible and it is extremely difficult for us to accept that such an impossibility should also be taken
into account and compensation awarded on the basis of the potential value. We, therefore, hold that the court below was in error in holding that
the potential value of the acquired lands deserved the award of a higher compensation at Rs. 65,000/- per acre. We may also in this connection
point out that the benefit what is likely to arise to the Neyveli Lignite Corporation after its acquisition, which may either result in a higher profit to
the Neyveli Lignite Corporation or even otherwise enhance the value of the acquired land, would not be a relevant circumstances, which could be
taken into account under S. 24of the Act. Under S. 24, one of the matters to be excluded is, whether there is likely to be any increase in the value
of the land acquired from the use, to which it will be put, when acquired. It follows from this, the fact that Neyveli Lignite Corporation, after
acquisition, may, after investing several cores, be in a position to exploit the minerals to its advantage and also earn considerable profits, is not a
ground for awarding a higher compensation, as such a consideration would be totally irrelevant in the matter of award of compensation. We are,
therefore, of the view that the Court below was in error in enhancing the compensation the ground that the potential value relating to the
exploitation of the minerals, should be taken into account and also for the benefits that are likely to arise to the Neyveli Lignite Corporation as a
result of the acquisition.
We are entirely in agreement with the reasoning of the Division Bench and therefore, the claimants cannot claim any additional compensation on
the basis of the potential value of the lands. Reliance is also placed on the Judgment of a learned single judge of this court in W.P. No. 5067 of
1982. That writ petition was filed by one of the owners of the lands sought to be acquired for the very same purpose as these lands. The ground
urged was that the notice under S. 9(1) of the Act merely stated that the lands were acquired for public purpose without mentioning that it was for
digging a second mines and for excavating minerals. Rejecting the said contention, the learned judge dismissed the writ petition stating that it was
for the petitioner to put forth his case having regard to the very purpose of digging a second mine which is a public purpose and to establish the
potential value of the lands which has to be taken into consideration. Reliance is placed on that observation and it is stated that the Court has to
take into consideration the potential value of the lands. There is no substance in this argument. The observation of the single judge would only mean
that the petitioner can put forward his case to the court and the court has to deal with the said claim.
Reliance is placed on the decisions in P.R. Modi Vs. The Collector, Durg, . M/s. Bum & Company Ltd., v. Special Tahsildar (L.A) Railways,
Salem (1979 TLNJ 276) and Anar Singh v. Union of India (AIR 1985 Delhi 298). All those cases deal with the question as to how far the
potential value of the lands has to be taken into consideration while fixing the compensation for the acquired lands. The principles laid down therein
will not help the claimants in the present cases in view of the facts and circumstances set out earlier.
The only question which remains to be considered is, whether the multiplier to be adopted is 20 or more than that. No direct authority has
been placed before us by the claimants for holding that the multiplier of 20 should be adopted for fixing the value of agricultural lands. In one case
of lands having minerals, the Court adopted a multiplier of 20 and in one case, multiplier of 15 has been adopted. But, in the case of agricultural
lands the Supreme Court laid down in Special Land Acquisition Officer, Davangere Vs. P. Veerabhadarappa and Others, that the value has to be
fixed on the basis of the returns which will be yielded by gilt-edged securities. The relevant portion reads as follows.
In regard to investment agricultural lands, there are many imponderables in as much as the invasion runs a much greater risk than the risk that he
runs in investment in housing which consists in vagaries of weather and other uncertainties. There is no security of principal, no liquidity of
investment nor any certainty of income. The appreciation of principal or income is also uncertain. The reasons for these is that agricultural lands are
not readily transferable under the various land reform legislations e.g. laws relating to ceiling or agricultural holdings under the existing State laws
and tenancy laws which place restrictions on transfer of such lands with concomitant danger of effacement of the rights of the absentee-landlords
and the creation of rights in the tillers of the soil. In evaluating the rate of return which would ordinarily satisfy an investor in such a property, the
risk factor has further to be evaluated. There may be total or partial failure of crops either through failure of rain or drought, or inadequate or
excessive rainfall. There may be failure of crops on account of locust invasion or insects or pests. The cast inputs such as seeks, water fertilizer,
labour charges etc. would very from year to year. If the overall cost goes up, the income from agricultural produce would be comparably less. The
fluctuations in price of agricultural produce introduce a great deal of uncertainty in regard to the income that can be expected from the sale of the
produce. If the yield of the crop in other producing countries is large, or the market prices prevailing in such countries are low, the prices of such
agricultural produce in India would go down. In view of these considerations, an investor would expect a much higher rate of return so that the rest
factor is properly discounted.
In the premises, when the rate of return 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, capitalization could not in any event exceed ten. In the present case, the State Government
however contends that the proper multiply to be applied should be 121/2 in computation of the capitalized 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 notification under 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 capitalized value of the lands.
A multiple of 12-1/2 was adopted in that case. This principle was followed by the Supreme Court in Addl. Special Land Acquisition Officer Vs.
Yamanappa Basalingappa Chalwadi, . After referring to the decision in Special Land Acquisition Officer, Davangere Vs. P. Veerabhadarappa and
Others, the Supreme Court adopted only a multiplier of 10. Obviously the Court had taken note of the fact that the interest return on gilt edged
security has by then increased. It is necessary to note that the acquisition in that case was in the year 1980, whereas in Special Land Acquisition
Officer, Davangere Vs. P. Veerabhadarappa and Others, the acquisition was in the year 1971-72. The acquisition the present cases was in the
year 1978. Thus, the multiplier adopted by the Supreme Court in the later case will be more appropriate in these cases. Hence, applying the said
multiplier, the value of agricultural irrigated lands will be Rs. 23,000/- per acre. Taking note of the fact that prices have been spiraling up and that
the parties have been in Court for mere than a decade, we are of the view that an award of Rs. 25,000/- per acre will be just and proper in the
circumstances of the case. Thus, we fix the compensation for irrigated dry lands at Rs. 25,000/- per acre.
As regards manavari dry lands, the income is stated to be Rs. 1,400/- per acre per year. If the multiplier of 10 is adopted, it will come to
Rs.14,000/-. Taking the other circumstances mentioned above into account we fix the compensation for manavari dry lands at Rs. 15,000/-per
acre.
We do not accept the third classification adopted by the Land Acquisition Officer. The classification adopted by the Subordinate Judge is
more appropriate and correct. Thus we fix the compensation at Rs. 25,000/- (Rupees twenty five thousand) per acre for irrigated dry lands and
Rs. 15,000/- (Rupees fifteen thousand) for manavari dry lands.
The Subordinate Judge has awarded certain amounts for standing trees and wells. In so far as the standing trees are concerned, compensation
is payable to the claimants and the award is confirmed. But, is regards wells, there cannot be a separate award; once the compensation is paid for
the land. (Vide O. Janardhan Reddy and others Vs. Spl. Dy. Collector, L.A. Unit-IV, LMD, Karimnagar, A.P. and others, . Hence, the award of
compensation for the wells is set aside.
In so far as A.S. No. 158 of 1986 is concerned, there is a cashew thops in an extent of 1 acre 13 cents. We award a compensation of Rs.
30,000/- per acre with regard to the said land.
The said amount was fixed with regard to cashew thope in our judgment dated 21.2.1995 in A.S. No. 118 of 1985 etc. We are of the view that
the same value can be fixed here.
The award of compensation for standing trees by the Subordinate Judge is confirmed. The claimants will be entitled to interest as per section
28 of the Act and also the usual solatium at 30%. The appeals are allowed in part to the extent indicated above. There will be no order as to costs.